Sell the Ackman Rally in Chipotle (CMG) - Oppenheimer
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Oppenheimer analyst Brian Bittner is telling clients to sell the Chipotle Mexican Grill (NYSE: CMG) pop following news Bill Ackman has amassed a nearly 10% stake.
Bittner commented, "We believe CMG's poor risk/reward remains problematic for shareholders. Pershing Square revealed a 9.9% ownership, but unlike other activist situations, we don't see any viable paths to financially engineer shareholder value from the boardroom. CMG remains a hopeful sales/margin rebuilding story, which is at a standstill. Unfortunately, our analysis (click here) highlights meaningful risk to Street's estimates through '18 and supports our caution. At 47x '17E P/E (35x '18E), we question Pershing's suggestion that CMG shares are "under-valued," particularly in light of diminishing returns on capital and risks to unit growth."
The firm maintained a Perform rating.
Shares of Chipotle Mexican Grill closed at $414.07 yesterday.
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Related EntitiesWilliam Ackman, Pershing Square Capital
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