Credit Suisse Downgrades Chipotle Mexican Grill (CMG) to Neutral; 'New Normal'
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Credit Suisse downgraded Chipotle Mexican Grill (NYSE: CMG) from Outperform to Neutral with a price target of $375.00 (from $500.00) citing a 'new normal' following disappointing results.
Analyst Jason West commented, "CMG posted another disappointing result as the sales recovery continues to take longer than expected. 3Q same store sales (SSS) were -22% vs. CS/cons. -18% (per Consensus Metrix). Trends barely budged from 2Q16 (-24%) despite ~200bps easier compare and rollout of an aggressive (temporary) loyalty program during 3Q. GAAP EPS was 27c (incl. ~52c one-time items) vs. CS/cons. $1.24/$1.63. Restaurant margins of 14.1% missed CSe by 310bps on lower SSS, loyalty program costs, higher marketing/promo spend, and higher avocado costs."
The firm's 2016/2017 EPS moves to $1.14/$8.82 from $2.51/$10.49. 4Q16E SSS falls to -3.5% from 0%. 2017 forecast now embeds +9% SSS (from +11%).
Shares of Chipotle Mexican Grill closed at $405.67 yesterday.
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