Oppenheimer Suggests Chipotle Mexican Grill Is Still A 'Spicy Stock'

Brian Bittner of Oppenheimer on Thursday suggests that Chipotle Mexican Grill, Inc. (NYSE: CMG) remains a “spicy stock” despite shares trading near all-time highs.

“Investors fear the stock could now underperform as comps undeniable slow,” Bittner wrote. “Worries are driven by last cycle (in 2012) when fundamentals entered danger-zone and shares declined 46 percent peak-to-trough.”

Bittner adds that 2015 is different from 2012 as 2015's traffic holds optionality against “braced-for” projections and positive themes and earnings per share holds upside against low-case margin estimates. The analyst also notes that the secular, macro and internal tailwinds are more powerful while comp and margin estimates are “appropriately tempered” as the cycle is well anticipated.

Bottom line, Bittner states that shares trading at an 18x forward EBITDA may appear “stretched” but shares have traded at more expensive multiples with slower comp trends, lower return metrics and less proven runway for unit growth.

Shares are Outperform rated with a $775 price target.

Image credit: Youkai, Flickr