NEW YORK (TheStreet) -- Shares of Chipotle Mexican Grill Inc (CMG) were rallying, up 2.85% to $629.93 in mid-morning trading Thursday, after the burrito chain was upgraded to "buy" from "hold" by analysts at Miller Tabak earlier today.
Analysts at the firm also upped its price target to $725 from their previous $715.
Miller Tabak believes that Chipotle can deliver an average earnings-per-share growth of at least 25% through 2016.
Analysts added that the decline in food costs, in combination with mid to high single-digit same-store restaurant sales growth could lead to above peer EPS growth figures.
"We also contend CMG's unit pipeline remains solid, and think ShopHouse's pending entry into the Chicago market will presage a period of more rapid expansion for CMG's fast casual Asian concept," the firm wrote in a note.
Miller Tabak also said that the recent pullback in Chipotle shares present an opportunity for solid share price upside in the next few quarters.
Denver-based Chipotle operates Chipotle Mexican Grill restaurants, serving a menu of burritos, tacos, burrito bowls, and salads through its 1,410 restaurant locations.
Separately, TheStreet Ratings team rates CHIPOTLE MEXICAN GRILL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHIPOTLE MEXICAN GRILL INC (CMG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel its 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 came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 20.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CHIPOTLE MEXICAN GRILL INC has improved earnings per share by 47.0% 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 $14.13 versus $10.46 in the prior year. This year, the market expects an improvement in earnings ($17.39 versus $14.13).
- 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 47.6% when compared to the same quarter one year prior, rising from $83.07 million to $122.64 million.
- Net operating cash flow has increased to $242.72 million or 35.01% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.49%.
- Powered by its strong earnings growth of 46.96% and other important driving factors, this stock has surged by 25.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: CMG Ratings Report