Chipotle falls after weaker than expected earnings guidance

Shares of quick service restaurant operator Chipotle Mexican Grill (CMG) are lower after the company issued weaker than expected Q4 earnings guidance earlier this morning. The company forecast Q4 EPS of $1.92-$1.97, versus consensus of $2.09, and guided Q4 revenue to $699.2M, versus consensus of $690.86M. Monty Moran, co-CEO, cited a faster than expected rise in food costs in Q4, but said food inflation should level off in 2013. Following the disappointing guidance, research firm Jefferies said it expected the shares to be down meaningfully, adding that Chipotle's 2013 earnings could be significantly below consensus. Jefferies maintained an Underperform rating on the stock with a $215 price target. On a positive note, William Blair said in a note to investors this morning that Chipotle's comparable store results will likely bottom in Q1 before moving higher. William Blair viewed Chipotle's business as healthy and said they would be opportunistic buyers on any share weakness. The firm maintained an Outperform rating on the stock. RW Baird was positive on Chipotle as well, also saying any weakness represented a buying opportunity. The stock initially gapped down over 10% at the open, but has since recovered and is trading lower by about 6% to $279.31 in late morning trade. The Fly notes that volume is very heavy, with nearly 1.8M shares exchanging hands in morning action, more than twice the average daily volume.