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UPDATE: Raymond James Reiterates On Chipotle Mexican Grill On Raised EPS Estimates

Dwight Einhorn

In a report published Thursday, Raymond James analyst Bryan C. Elliott reiterated an Outperform rating on Chipotle Mexican Grill (NYSE: CMG), and raised the price target from $560.00 to $625.00.

In the report, Raymond James noted, “We reiterate our Outperform rating on CMG and are raising our EPS estimates to reflect tighter assumptions regarding a menu price increase currently being rolled throughout the system (rolled out earlier than originally indicated and average price increase expected to be at top end of previously communicated 4-6% range). We are also encouraged by recent management comments indicating recent price increases have had little to no impact on underlying traffic trends.

"CMG shares have rebounded solidly over the past three weeks and fully retraced the decline following disappointing 1Q margin and EPS results (despite spectacular 13.4% comp growth). We believe the stock can continue to work from here on continued powerful comp outperformance (~10% vs. flat industry) and dramatically improved margins and EPS growth in 2H14 (+40% y/y vs. +7.6% in 1Q14) behind the aforementioned menu price increase.

"We are raising our 12-month price target to $625, which equates to 38x our new 2015 EPS estimate of $16.50.”

Chipotle Mexican Grill closed on Wednesday at $570.34.

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