Jefferies Lifts PT on Chipotle (CMG) to $244 Following Q3 Results; Boosts EPS Outlook, But Remains Bearish

Chipotle Mexican Grill (NYSE: CMG) shares are trading higher Friday morning, following solid quarterly results Thursday. On the news, Jefferies increased it's price target on Chipotle 1.7 percent from $240 to $244, maintaining its Underperform rating.

Jefferies notes that restaurant margins fell 100 basis points, with food costs increasing 250 basis points.

Comparable-store sales surprised Jefferies, coming in at 11.3 percent versus the firms estimate of 9 percent growth. Jefferies believes an earlier roll out in pricing may have added 1.3 percent to comps upside and an "noticeable" chunk of margin leverage.

Looking ahead, Jefferies comments, "Higher menu prices have helped drive double digit comps & flattish margins in 2011, but we think that in order to see margin expansion in 2012, CMG will likely need much more than “low-single-digit” comps (guidance) & also menu pricing closer to 4 percent rather than the effective 2 percent price that is currently anticipated (no new pricing)."

Jefferies boosted some numbers following results, with fiscal 2011 EPS moving from $6.65 to $6.80 and fiscal 2012 EPS increased from $8.00 to $8.12.

Click here for more analyst color on Chiptole, or here for a ratings history.

Chipotle is 5.3 percent positive Friday.

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