Analysts Flock to Chipotle After Blowout Earnings Report

Chipotle reported Q4 earnings and same-store sales that soared past estimates

by Patrick Martin

Published on Feb 7, 2019 at 9:47 AM

The shares of Chipotle Mexican Grill, Inc. (NYSE:CMG) are up 10% to trade at $578.98, and nabbed a three-year high of $580 out of the gate. The burrito chain reported fourth-quarter adjusted earnings of $1.72 cents per share -- smashing the average estimate of $1.37 -- while revenue of $1.20 billion also topped the $1.19 billion forecast. Same-store sales also emphatically beat expectations, with Chipotle citing an increase in transactions both in-store and online. 

What's followed can only be described as a barrage of bull notes. No fewer than 13 brokerages have issued price-target hikes, including to $650 from $560 at Bernstein, territory CMG has not traded near since October 2015. 

On the charts, Chipotle stock has now added 30% in 2019. CMG tumbled to the $380 level amid the Christmas Eve broad market sell-off. However, the shares bounced from there, an area that also coincided with their 320-day moving average. 

Today's bull gap is likely catching bearish traders off guard. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CMG's 10-day put/call volume ratio of 1.10 ranks in the 94th annual percentile, meaning puts have been bought to open relative to calls at an accelerated clip. Plus, 9.5% of the security's available float is dedicated to short interest.

Despite the wave of bull notes today, Chipotle could still face more shifts in analyst sentiment. Of the 28 brokerages covering the security, 15 rate it a "hold" or worse. And the stock's consensus 12-month price-target of $540.64 now sits below its current perch.

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