Chipotle (CMG) Stock Gaining Today, but Analysts Remain Skeptical
Bloomberg News
NEW YORK (TheStreet) -- Shares of Chipotle Mexican Grill (CMG) - Get Report are moving higher on Friday afternoon, despite posting disappointing earnings yesterday. Senior Barclays restaurant analyst Jeffrey Bernstein and CNBC contributor and restaurateur Tim Love discussed a potential Chipotle comeback on this afternoon's "Power Lunch."
"I think management made it very clear that the recovery is going slower than expected. If it ever does get back to full strength it's going to take a lot longer than people thought," Bernstein said.
Even with Chipotle stock moving higher today, which has surprised Bernstein, he is still not recommending the stock.
"I think investors are just buying into the idea that in the short-term it's all about any sign of improvement. We are not currently recommending the shares, the valuation, we think, is fully loaded," Bernstein explained.
Love similarly believes that long-term recovery is still well ahead of the company, however he thinks a recovery is certainly not out of the question, noting that as a restaurateur he enjoys eating at Chipotle.
"It's very media driven in the fact that their name is just not great right now, but they have to continue to keep moving forward," Love said, adding the company must give people a good reason to eat there.
"I think what they're doing, food safety wise, is a bit overzealous. They're pushing it as hard as they can, I think what they need is to just focus on customer confidence," Love said.
However, this customer confidence should not stem from Chipotle itself telling customers that its food is good to eat, but rather, as Love noted, "their friends need to tell them to go to Chipotle."
Shares of Chipotle are higher by 6.11% to $443.60 late Friday afternoon.
Separately, TheStreet Ratings rates Chipotle as a "Hold" with a ratings score of "C." The primary factors that have impacted TheStreet Ratings rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strongest point has been its very decent return on equity which TheStreet Ratings feels should persist. At the same time, however, TheStreet Ratings also finds weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: CMG