UPDATE: Longbow Upgrades Chipotle, Optimistic On SSS & Price Increase

In a report published Wednesday, Longbow Research analyst Alton Stump upgraded Chipotle Mexican Grill (NYSE: CMG) from Neutral to Buy and set a $641.00 price target.

Stump noted the acceleration in Chipotle's same-store traffic over the past four quarters year-over-year. Same-store traffic also grew over the last two quarters on a two-year stacked basis.

Alton Stump commented, “This feat was particularly remarkable amidst a challenging industry demand environment along with harsh weather conditions during late 2013/early 2014. While various competitive threats pop up occasionally for CMG, the company's superior performance versus its peers is showing no signs of slowing down.”

Longbow added that the four to five percent price increase will have little to no impact on store traffic. The analyst remarked that the timing of the price increase likely correlates with “robust” same-store traffic through the first quarter of 2014. Stump sees Chipotle generating low double-digit same store growth in 2H14.

The analyst lowered 2Q14 EPS estimate from $3.41 to $3.13, versus consensus of $3.08. Longbow raised 3Q14 and 4Q14 EPS estimates from $3.41 and $3.12 to $3.45 and $3.43, respectively. 2014 and 2015 estimated EPS also grew to $12.65 and $16.02.

Longbow sees second quarter revenue of $989 million. Stump forecasts 2014 and 2015 revenue of $3.93 billion and $4.61 billion, respectively.

Shares of Chipotle Mexican Grill closed at $501.91 on Tuesday. The stock opened up near one percent. Shares are currently trading at $502.47.