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Analyst Actions: Chipotle, Cirrus Logic, Omniture

July 25, 2008

JEFFERIES DOWNGRADES CHIPOTLE MEXICAN GRILL TO HOLD FROM BUY

Jefferies analyst Jeff Farmer says Chipotle Mexican Grill (CMG) delivered basically in-line second quarter EPS of $0.74, vs. the Street’s $0.75, and same-store sales growth of 7.1%, vs. 7.0%.

However, with word that CMG’s same-store sales decelerated as the quarter progressed into July and the commodity cost outlook is looking increasingly bleak, he’s stepping to the sidelines as CMG appears to have finally reached a fundamental inflection point and the end of a multi-quarter string of same-store sales and EPS upside [upside in nine of the last 10 quarters heading into its second quarter release].

Farmer cuts $2.64 2008 EPS estimate to $2.56 and $3.34 for 2009 to $3.12. He also cuts $100 price target to $80, with new target equating to about 26 times his 2009 EPS estimate.

NEEDHAM UPGRADES CIRRUS LOGIC TO BUY FROM HOLD

Needham analyst Vernon Essi Jr. says (CRUS) first quarter revenue and non-GAAP EPS were above his and consensus estimates; second quarter revenue guidance was a little above consensus [$52 million at the midpoint vs. $50 million estimate], while EPS was in line.

Essi notes, however, gross margin guidance was down 200 basis points quarter-to-quarter due to a mix shift towards portable audio. As such, he cuts $0.31 fiscal year 2009 [March] non-GAAP EPS estimate to $0.24, but raises $0.39 fiscal year 2010 to $0.40.

He says he’s pleased with other growing developments at CRUS, such as its sales channel investment in Japan and continued socket traction in portable audio beyond Apple (AAPL). He also notes that a material cost-cutting restructuring is finished.

Along with his upgrade, he sets a $7 price target for the stock.

BROADPOINT CUTS OMNITURE TO NEUTRAL FROM BUY

Broadpoint analyst Bradley Whitt says Omniture’s (OMTR) gross margins declined 330 basis points quarter-to-quarter as OMTR is making substantial investments in network; 2008 capex could exceed $45 million.

Whitt notes that the company secured 250 net new customers in the second quarter, consistent with the first quarter, but down from 300+ in the second quarter 2007.

Despite solid second quarter 2008 bookings, he sees limited upside chance to 2008 guidance and considers the shares fully valued. In addition to sluggish customer growth, suppressed gross margins, and negative free cash flow due to significant capex requirements, he’s also concerned about sales resource distractions from Migrating HBX customers to SiteCatalyst, competitive pricing pressure, and changes in its salesforce structure.

He trims $0.45 2008 EPS estimate to $0.43.




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