Chipotle Mexican Grill (CMG) Estimates, Valuation Range Cut at Wells Fargo as Lackluster Sales Persist
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Wells Fargo analyst Jeff Farmer lowered estimates and his valuation range on Chipotle Mexican Grill (NYSE: CMG) to $440-460 from $500-520 as a lackluster SSS recovery persists.
Farmer commented, "Investor patience is understandably wearing thin as Chipotle’s SSS recovery pace has fallen well behind that of prior food safety case studies –we acknowledge the stock’s mounting valuation premium on falling Street estimates, but remain constructive with CMG’s management potentially reaching a tipping point in the pursuit of more aggressive turnaround efforts. CMG is scheduled to report 3Q16 earnings on 10/25 after the market close. We’ve modeled -20% same-store sales (SSS, Street at -18%) and $1.63 Q316E EPS (Street at $1.65). Lowering 2016E EPS to $4.02 from $4.86 and 2017E to $10.77 from $12.70 to reflect our expectation for a more modest pace of average unit volume recovery in coming quarters. Lowering valuation range to $440-460 from $500-520."
The firm maintained an Outperform rating.
Shares of Chipotle Mexican Grill closed at $393.96 yesterday.
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