Jefferies Maintains an 'Underperform' on Chipotle Mexican Grill (CMG); Strong Growth Model, But Valuation Appears Stretched

Jefferies maintains an 'Underperform' on Chipotle Mexican Grill (NYSE: CMG) price target raised from $244 to $300.

Jefferies analyst said, "Mgmt lifted conservative guide for “low single digit” SSS (2% price + 1-2% traffic) to “mid single digits” and while trends are slowing & y/y compares are difficult (two yrs of dbl-digit SSS), we still see upside to this range and raise '12 SSS to 7.0% (fr. 6.5%) vs. cons. 7.2%. CMG’s stock has risen on strong SSS, but with food cost infl. to persist through '12, we think 45x P/E is too pricey given low likelihood of upside to Street estimates. CMG believes it still has price flex (~4.9% out of ’11 & no new system pricing action currently planned), but the miss indicates that even >10% SSS can’t completely offset commodity inflation."

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 $370.41 yesterday.

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