How Will Chipotle (CMG) Stock Respond To This Analyst Action?

NEW YORK (TheStreet) -- Shares of Chipotle Mexican Grill, Inc.  (CMG) are lower by -0.82% to $666.36 this morning after the company was downgraded to "neutral" from "buy" at Longbow Research.

The firm removed its $697 price target, and said the cut in rating was based on valuation.

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Separately, TheStreet Ratings team rates CHIPOTLE MEXICAN GRILL INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHIPOTLE MEXICAN GRILL INC (CMG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 28.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 63.12% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • CHIPOTLE MEXICAN GRILL INC has improved earnings per share by 24.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHIPOTLE MEXICAN GRILL INC increased its bottom line by earning $10.46 versus $8.75 in the prior year. This year, the market expects an improvement in earnings ($13.65 versus $10.46).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 25.5% when compared to the same quarter one year prior, rising from $87.85 million to $110.27 million.
  • Net operating cash flow has increased to $180.65 million or 26.77% when compared to the same quarter last year. In addition, CHIPOTLE MEXICAN GRILL INC has also vastly surpassed the industry average cash flow growth rate of -68.88%.
  • You can view the full analysis from the report here: CMG Ratings Report
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