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Be Careful With Chipotle Stock Before (And After) Earnings

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Chipotle Mexican Grill, Inc. NYSE:CMG - Be Careful With Chipotle Stock Before And After Earnings

From food-borne illnesses, the subsequent food safety risks and concerns, and dampened consumer sentiments, Chipotle Mexican Grill, Inc. CMG 0.08% has had its share of difficulties recently.

While the stock has rebounded over the last three months from its previous downhill snowballing, the broader picture for the fast-casual restaurant is pretty ugly.

How Ugly Has Q1 Been?

Chipotle is set to release its Q1 figures Tuesday after the closing bell, at which time analysts and investors will hear from the company just how poorly the figures have been and what execs expect for the future.

At this point, the average analyst recommendation for Chipotle is to Hold the stock, based on 35 ratings, 11 rating the stock as a Buy, 17 as a Hold, two as Underweight and five as a Sell.

Related Link: It's Very Difficult To Have Conviction On Chipotle Right Now, Says Stephens

Stephens' Perspective

In one of the most recent analyst reports ahead of Tuesday's earnings release, Will Slabaugh and Billy Sherrill of Stephens previewed Chipotle.

"We continue to remain cautious on the name," the analysts began, "given our belief that the stock is currently priced for a robust and linear turnaround, despite having little-to-no visibility into the Company's true earnings profile or rate of recovery over the next two years."

Despite calling Chipotle the firm's "best-in-class operator," the analysts issued a note of caution. "[W]e believe that the current valuation of 35x 2017's potential EPS (Stephens at $12.75), we believe the market is crediting the Company with the ability to return to peak SSS and margin performance over a relatively short period of time – an assumption that we have difficulty finding support for at this time."

The analysts currently rate Chipotle at Under Weight, with an attached price target of $375.

Chipotle is down about 23 percent over the past six months, 8 percent year-to-date and trading essentially flat on the day at $442.05, slightly down a sixth of a percent.

DateFirmActionFromTo
Apr 2016JP MorganUpgradesNeutralOverweight
Apr 2016CLSADowngradesBuyUnderperform
Apr 2016Evercore ISI GroupInitiates Coverage onHold

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