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Goldman Sachs Says Sales Growth At Chipotle (CMG) Will Overwhelms Rising Food Costs

February 11, 2011 10:33 AM EST
Get Alerts CMG Hot Sheet
Price: $2,906.77 -0.57%

Rating Summary:
    32 Buy, 14 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Despite stellar earnings after the close from Chipotle Mexican Grill (NYSE: CMG), the stock was downgraded at four firms today on worries about rising food costs. However, analysts at Goldman Sachs are looking past the food inflation and believe an acceleration in same-store sales will overwhelm the higher costs.

Goldman reiterated their Buy rating on CMG raised their price target by $25 to $310. The firm calls CMG "the best growth story within our coverage universe and believe the company is still very early in its long-term growth trajectory."

Goldman believes the company is only currently at 25-30% of its U.S unit potential. In addition, their recent survey suggest that Chipotle national brand awareness is still at less than 50%. Also, the double-digit SSS growth is being driven almost entirely by incremental traffic growth to existing stores. Early stage international expansion and the impending launch of a second restaurant concept provide upside growth optionality, the firm also notes.


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