William Blair: Chipotle Looks Poised to Beat Expectations

http://www.benzinga.com/analyst-ratings/analyst-color/15/04/5414901/baird-slow-down-at-chipotle-mexican-grill-is-short-term-
William Blair issued a report on Chipotle Mexican Grill, Inc.CMG ahead of Chipotle’s earnings announcement on April 21st. Currently William Blair rates Chipotle as Outperform while a price target is unavailable.

Sharon Zackifia and Tania Anderson, analysts at William Blair wrote, “We expect Chipotle’s first quarter EPS will meet our estimate of $3.75, up 42 percent and above the consensus of 3.63….Chipotle has emerged as a leader in the fast-casual Mexican restaurant space, as the concept’s freshly prepared food, streamlined operations, and industrial chic ambience have generated strong consumer appeal. As a result, Chipotle generates enviable sales productivity in addition to best in class restaurant level margins.”

William Blair offered several key points for investors:

1. Anticipates a 12 to 14 percent increase in same-store sales growth

2. Projects the third consecutive quarter of of year over year restaurant level margin expansion

3. Sales leverage will drive G&A costs lower to 5.8 percent.

4. Expects management to reiterate plans for 190 to 205 new locations, representing growth of 11 to 12 percent.

In a recent article by Benzinga, Baird’s David Tarantino said that the company could face a slowdown in growth.

“Sentiment on the stock “could remain skittish,” according to Tarantino, until the company “cycles through the most difficult comparisons.”
“But Tarantino said the company’s price to earnings “premium” relative to the average stock in the S&P 500 is now 25 percent below its two year mean, while Chipotle revenue will continue to feature fast growth driven by additional stores.”

Currently Chipotle is trading at $678.64, down 0.43 percent.