Chipotle Mexican Grill (CMG): Bounce?

From Notable Calls

Chipotle Mexican Grill (NYSE: CMG) is getting defended by several firms this morning after missing ests last night:

- Baird is upgrading CMG to Outperform from Neutral based on positive view of internal fundamentals andvaluation; would use expected weakness related to Q4 results as buying opportunity; believe 2008 EPS estimates have upward bias, even if difficult macro backdrop continues; consider valuation (prospective NTM P/E 35X; PEG 1.2X) attractive for powerful long-term growth story with robust operating trends. Reits $140 tgt.

- Piper Jaffray reits their Buy and $200 (!) tgt saying that should the market penalize the company for 60% earnings growth (i.e. stock is trading down after market following in line results) they suggest investors use the pullback as a buying opportunity.

Despite difficult market conditions, Chipotle continued to (at least) meet expectations as fourth-quarter earnings increased 59.6% to $0.53 per share; in line with PJ's estimate. Restaurant profit margin increased 210 bps to 22.1% due primarily to the company's ability to effectively manage expenses as well as sale leverage, or the 10.6% same-store sales result.

- Cowen vigorously defends CMG shares on likely weakness this morning after CMG posted '+$0.04 better-than-they-expected' 4Q07 EPS of $0.54 (ex. $0.01 charge) vs. their $0.50E and in-line with mgt's inference at The Cowen and Company Consumer Conference that "4Q07 EPS growth will likely be about in-line with current Consensus' $0.54E'). The headline here is 4Q07's EPS performance of $0.54 was CMG's best operating quarter of 2007 and any model to the contrary is simply intellectually challenged. As such, they would view a sub-$100 CMG share-price open today as an historic buying opportunity for 'the next 5,000+ unit global restaurant company' at such an exciting, early stage in its development.

Notablecalls: What can I say. Buy the stock. It's going to bounce. Would not be surprised to see $100+ level as soon as today! (stock traded as low as $92 in after hours action).

Note there's a 40%+ short interest in the name. The shorts will probably not attempt to chop it down but rather use the weakness to cover! The stock is down from $150.

For more calls go to http://notablecalls.blogspot.com/

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