3 Expert Reactions To Chipotle's Q1 Print

Chipotle Mexican Grill, Inc.'s CMG first-quarter results earned praise from analysts and investors, as the stock traded higher by more than 12%.

Chipotle reported quarterly earnings of $3.08 per share, which beat the analyst consensus estimate of $2.90. The company reported quarterly sales of $1.4 billion, which missed the analyst consensus estimate of $1.42 billion. This is a 7% increase over sales of $1.308 billion the same period last year.

The Chipotle Analysts

Morgan Stanley analyst John Glass maintains an Equal-Weight rating on Chipotle's stock with a price target lifted from $602 to $630.

Wedbush's Nick Setyan maintains at Outperform, price target lifted from $860 to $870.

KeyBanc Capital Markets analyst Eric Gonzalez maintains at Overweight, price target lifted from $790 to $955.

Morgan Stanley: What We Know And Don't Know

Chipotle's report shows the business is "more durable" than expected and there are several takeaways related to what we know and don't know, Glass wrote in a note.

The business is on a "firmer footing" compared to its peers, with comps trending lower in the high teens which is "remarkable" for a restaurant chain without a major drive-through presence. Management believes its unit economic model remains favorable, and the company can take advantage of a bruised real estate market to develop new stores quickly.

On the other hand, a few unknowns plaguing Chipotle's outlook include customer responses to any dining rooms reopening being a big question mark and the impact of the recession on restaurant demand.

Wedbush: Pre Crisis Sales By End Of 2021

Chipotle could see a "relatively elongated recovery" to pre coronavirus average unit volume of $2.2 million by the third quarter of 2021 and total 2022 AUV should come in at $2.37 million, Setyan wrote in a note. More near-term estimates include 35 new store openings in 2020 versus prior estimates of 103, while 2022's estimated unit growth of 160 remains unchanged.

But Setyan said real estate owners appear to be more willing to accommodate drive-through lanes so investors shouldn't be surprised if a higher number of new stores open in 2021 and 2022. This positions the company to "weather near-term headwinds" and become a market share winner in a post coronavirus environment.

KeyBanc: Playing Offense

Chipotle boasts an "enviable" liquidity profile with more than $900 million on the balance sheet and zero debt, Gonzalez wrote in a note. The company also expects to burn through up to $60 million in cash a month based on a 30% to 35% decline in same-store sales. If same-store sales come in near a negative high-teen number, EBITDA after G&A expenses could come in around flat.

"Chipotle's clean balance sheet and ample access to cash is just one reason why Chipotle is poised to exit this crisis on the offensive," the analyst wrote in a note.