Sell the Ackman Rally in Chipotle (CMG) - Oppenheimer

September 7, 2016 9:54 AM EDT
Get Alerts CMG Hot Sheet
Price: $407.12 -0.88%

Rating Summary:
    15 Buy, 19 Hold, 8 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 9
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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.

For an analyst ratings summary and ratings history on Chipotle Mexican Grill click here. For more ratings news on Chipotle Mexican Grill click here.

Shares of Chipotle Mexican Grill closed at $414.07 yesterday.

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