Chipotle Surges Past $400

NEW YORK ( TheStreet) - Chipotle Mexican Grill ( CMG) surged 7% on Friday, crossing the $400 mark, as investors applauded the fast-casual burrito chain's solid second quarter earnings.

Chipotle shares were rising 7.1% to $403.39 at last check - the stock briefly hit $400 this time last year as well.

The Denver-based company said Thursday net income for the June-ending quarter rose 7.6% to $87.9 million compared to the year-earlier period. Chipotle's diluted earnings per share came in at $2.82, a penny higher than what Wall Street was expecting, and 10.2% higher than the year before.

Revenue for the quarter rose 18.2% to $816.8 million, surpassing analysts' expectations of $803 million. The company attributed the strong revenue growth to new stores opened - a total of 92 for the first half of the year and 1,502 stores overall.

Comparable restaurant sales of 5.5% came in higher than Wall Street expected.

Management moved the needle higher for its expectations for same-store sales in 2013, upping guidance from flat-to-low single-digits to low-to-mid-single digit growth.

One of the biggest question marks surrounding the company was when it would raise prices - a notion it's been hinting at for several quarters. During the earnings call, management took menu item price increases off the table at least for the next two quarters. "As a result of the relatively stable food cost and a longer term general forecast of a stable or perhaps even deflationary food cost we do not have any current plans to raise prices for the remainder of 2013," CFO Jack Hartung said.

Wall Street is liking what it sees in the burrito maker chain.

Piper Jaffray analyst Nicole Miller Regan boosted her 12-month price target to by $90 to $450, following earnings. "We remain confident in the company's long-term growth profile and its industry-leading approach to both managing and growing its human capital base," Regan wrote in a note. "Further, we have adjusted our estimates to reflect the relative increase of same-store sales trends for the year and ongoing cost management in the face of what appears to be somewhat of a deceleration in near-term inflation expectations." She rates Chipotle shares 'overweight.'

Bank of America Merrill Lynch analyst Joseph Buckley also boosted his 12-month price target, raising it $30 to $450 "on a higher expected valuation supported by re-accelerating sales at Chipotle," fueled by the company's slight improved same-store sales guidance and catering plans that are gradually being rolled out to several hundred stores.

Deutsche Bank analysts were not quite as bullish on the stock. Analyst Jason West maintains his "hold" rating on the stock. Chipotle's second-quarter results "were somewhat mixed in that traffic came in stronger than expected, though management again delayed the decision to raise menu pricing," the note says. "The diminished bull case around pricing and relatively full valuation may limit near-term upside in the shares."

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

>To submit a news tip, email: tips@thestreet.com.

Follow TheStreet on Twitter and become a fan on Facebook

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from Stocks

Markets Look Confused After Latest Beating

Markets Look Confused After Latest Beating

General Electric Expulsion From Dow Symbolizes Unsettled Week in Markets

General Electric Expulsion From Dow Symbolizes Unsettled Week in Markets

How Small-Cap Stocks Can Protect Your Portfolio From a Trade War

How Small-Cap Stocks Can Protect Your Portfolio From a Trade War

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

3 Great Stock Market Sectors Millennials Should Invest In

3 Great Stock Market Sectors Millennials Should Invest In