In a research report issued today, Oppenheimer analyst Brian Bittner reiterated an Outperform rating on Chipotle Mexican Grill (NYSE:CMG) with a price target of $775, as the company reported its fourth-quarter earnings report, posting diluted earnings of $3.84 per share on $1.07 billion in revenue, a 26.7% year over year increase.
Bittner wrote, “Sometimes high Wall Street expectations make a “best-in-class” quarter appear disappointing. While 16% comps were 100bps shy of buy-side, we remain confident CMG’s business model has weaponry to outperform consensus through ’16. Nearterm EPS estimates will be trimmed owing to food cost pressures, but mgmt now appears more open to additional menu pricing—an important positive. We intend to explore several investor pressure points at our HQ visit with mgmt next week.”
Bottom line, “Earnings estimates are moving lower after another food cost scare this quarter. We recommend using weakness to again buy the stock as we envision a pathway to positive earnings revisions later in ’15, especially if menu price increases are implemented.”
Chipotle Mexican Grill, Inc., together with its subsidiaries, develops and operates fast-casual and fresh Mexican food restaurants.