UPDATE: Chipotle Upgraded By JP Morgan Following 6% Drop on Thursday

On Monday, J.P. Morgan upgraded shares of Chipotle Mexican Grill (NYSE: CMG) from Neutral to Overweight and raised the price target from $550 to $575.

Analyst John Ivankoe believes “traffic momentum, three-years of latent pricing power and a variety of announced sales levers (vegan sofritas, catering, throughput, traditional and non-traditional marketing, mobile ordering/payment) should reduce the effect of tougher comp comparisons and still allow for modest restaurant margin growth despite high inflation.”

Average long-term growth will be driven by “longevity of domestic Chipotle unit expansion and low-risk investment optionality."

The $575 price target is calculated using a “multiple of 35x F15 EPS plus the value of ~25 in F15 cash on hand implying a $575 price target at Dec-14.”

Shares are trading higher by 0.6 percent to $522.75, recovering a portion of Thursday's 6.2 percent drop following first quarter earnings.