Q4 Preview: Analysts Love Chipotle (CMG)... Will Investors Be as Hungry?

Shares of Chipotle Mexican Grill (NYSE: CMG) are trading up roughly 0.7 percent Wednesday ahead of the release of its fourth-quarter results after the closing bell.

Analysts on Wall Street are looking for Chipotle Mexican Grill to report $1.83 per share in earnings on $591.23 million in sales. During the fourth quarter of last year, the company reported earnings of $1.47 per share on $482.52 million in total sales, implying growth 24 percent and 23 percent, respectively.

For the full year 2011, analysts on the Street are currently estimating $6.85 per share in earnings on $2.26 billion in total sales.

The fourth quarter conference call is scheduled for 4:30 pm ET.

According to data from Bloomberg, shares of Chipotle Mexican Grill have 14 Buy ratings, 13 Hold ratings and two Sell ratings. The average price target on shares of CMG is $360.50 with a range from $244 to $440.

Analyst Comments:

• Goldman Sachs forecasts same-store sales will top expectations for the quarter, but earnings may miss as margins come in weaker than expected. The firm believes any weakness in the stock presents an attractive time to aggressively buy. Goldman also anticipates any significant upside in the top-line will move share higher despite margin weakness.
  
  
• DA Davidson reaffirmed its Buy rating and raised its price target on the stock from $400 to $440 ahead of the release. The firm forecasts same-store sales growth of 10 percent and earnings of $1.82 per share on 26.3 percent margins. The firm estimates total revenue will increase 22 percent to $587.6 million.
  
  An analyst at DA Davidson highlighted what investors will be focusing on during the call: food inflation outlook and pricing strategy, update on the labor investigation and employee turnover trends, benefits of redirecting throughput efforts. Management quantifying what this opportunity could mean to 2012 traffic gains and a potential timeline for expanding the breakfast test will also be important takeaways.
  
  
• Wedbush is bullish as the firm believes Chipotle is best positioned among its peers to beat expectations.
  
  “We believe Chipotle remains well positioned to capture excess demand through productivity growth and price increases. We expect 4.5% pricing and 5.7% transaction growth to result in another quarter of >10% SSS growth in Q4. We also attribute 2012 guidance for 2% pricing and low-single-digit transaction growth to management’s customary conservatism,” reports an analyst at Wedbush.
  
  Wedbush is going into the quarterly results with an Outperform rating and $400 price target.
  
  
• Chipotle Mexican Grill presented at the ICR XChange conference on January 11 and Deutsche Bank noted three incremental data points were given to support a bullish thesis on the company: “(1)CMG announced plans to open a 2nd ShopHouse unit in DC, suggesting a positive start for the brand. Incremental news flow around this concept and intl. expansion could serve as a catalyst for the stock in coming quarters. (2) Mgmt. noted that throughput initiatives have begun to gain traction, suggesting strong comps trends may be more sustainable than previously expected. (3) Commentary suggested the immigration investigation may be winding down, possibly removing an overhang.”
  
  For the quarter, the firm forecasts $1.81 per share in earnings on $591.8 million in total revenues. Deutsche Bank maintained a Buy rating and $390 price target.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
• Deutsche Bank monitors UK auto sales as Chinese exports grow
• Advance Auto Parts (AAP) PT Lowered to $48 at DA Davidson Following 25% Selloff Post Q2 Results