CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We trim our 12-month target price to $2,110 from $2,220, 40x our 2024 EPS, below CMG’s five-year average forward P/E but in line with its peers. We trim our 2023 EPS to $44.58 from $45.04 and 2024’s to $52.69 from $55.54. CMG posts Q3 adj-EPS of $11.36, $0.73 above consensus. Revenue of $2,471M (+11.3% Y/Y) was in line with consensus. Operating income grew 17.5% Y/Y to $395M, with margin widening 80 bps Y/Y to 16.0% vs 15.3% consensus. Comp sales rose 5.0% vs 4.4% consensus, driven by transactions and pricing, partly offset by mix. Despite the drag on sales from mix, CMG has begun to see this ease in Q4, along with continued growth in comp transactions (mid-single digits). However, margins are expected to face near-term pressure due to higher food costs (mainly cheese and avocado), as well as a shift in orders from Chicken Al Pastor to Carne Asada. Nonetheless, we remain bullish given strong traffic trends as of late, which are on top of a 3% menu price hike, along with CMG’s tech and franchising initiatives.