Chipotle Mexican Grill (CMG): Cutting Estimates After Weak Consumer Survey - RBC
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RBC Capital analyst, David Palmer, reiterated his Outperform rating on shares of Chipotle Mexican Grill (NYSE: CMG) but cut his price target to $465 from $485 after reviewing data from a consumer survey which show a stabilized brand perception--but one that is stubbornly well below precrisis levels. A stronger recovery in consumer perception and pricing power could lead to a $595 upside scenario however, there is now a path to a lower $465 base case target.
Ahead of 3Q16 results, the analyst cut 2016 and 2017 EPS estimates from $4.59 and 12.04 to $3.54 (-77% YOY; cons. $3.67) and $10.42 (+194% YOY; cons. $10.10), respectively. The new 3Q SSS growth estimate of -20% (vs. -18% previously and -18% cons.) implies only modest sequential improvement over 2Q.
The new $465 price target equates to 32x the analyst's 2018e EPS estimate of $14.37 (+28% YOY; cons. $14.16).
Shares of Chipotle Mexican Grill closed at $394.35 yesterday.
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