Piper Jaffray On Chipotle: Remain Patient In Owning Shares

Chipotle Mexican Grill, Inc. CMG's guidance and spending update Monday was encouraging enough for analysts at Piper Jaffray to remain bullish on the company — despite a more than 5-percent decline in the stock in reaction to the announcement.

Piper Jaffray's Nicole Miller Regan maintains an Outperform rating in Chipotle's stock with an unchanged $530 price target given the company's ongoing momentum. Specifically, Chipotle's filing on Monday follows a "solid" first-quarter earnings report and recent checks suggests trends are heading in the "right direction."

The fast casual restaurant chain's update resulted in a "relatively minor" change to the analyst's second-quarter estimates, but top- and bottom-line estimates for the full-year remain largely unchanged. For the entire fiscal 2017, Chipotle is expected to earn $7.79 per share but the analyst noted this could prove to be conservative if the company's sales recovery outpaces a lower-bar expectations (see Miller Regan's track record).

Yet despite an encouraging outlook, investors need to "remain patient" in owning Chipotle's stock, Miller Regan emphasized. The long-term recovery story remains on track, and initial indications suggest new TV advertising spend has resulted in improved awareness among consumers. Nevertheless, it is a question of "when and not if" trends will improve and reflect on the stock.

At last check, shares of Chipotle were down 5.12 percent at $435.42.