Deutsche Bank Comments on Chipotle Mexican Grill's (CMG) Blowout Q2

Deutsche Bank maintained a Hold rating on Chipotle Mexican Grill (NYSE: CMG) and raised its price target to $630.00 (from $575.00). Analyst Jason West commented following blowout Q2 results.

"Upside driven by another big beat on SSS (+17.3% vs. DBe/cons. +11%/+10%). Plus, the recent price increase came in above the high end of expectations and underlying SSS momentum continued into July. This update leads us to significantly raise forward ests. With the stock indicated +10% after-hrs. and at ~40x our new NTM EPS, we are staying at Hold," said West.

"1) 2Q SSS of +17.3% consisted of +2.5% price, +2.5% mix, and +12.3% traffic. This compared to DBe +2.0%/+1.5%/+7.5%, resp., so traffic was key driver of upside. 2-year traffic accel. to +17.8% vs. +12.1% in 1Q, driven by improved throughput, effective marketing, and strong ops. We note that Easter timing hurt by ~100bps in 2Q. 2) CMG confirmed that it raised menu prices by 6.25- 6.5% during 2Q, above our model of ~5.5%. 3) SSS momentum has continued into July, with no material pushback so far on the pricing. SSS compares are ~70bps tougher in 3Q. However, with a full qtr. of menu pricing, SSS are likely to accel. from 2Q. We’re now modeling 3Q/4Q SSS at +18.4%/+15.4% vs. +11.0%/+8.5%, prev. This outlook is consistent w/ CMG’s updated guidance of “mid-teens” 2014 SSS (up from “high single-digits” ex-pricing, prev.)," he said.

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 $589.93 yesterday.

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