Updates

** Australia's Guzman y Gomez GYG.AX rises as much as 10.9% to A$21.970, its highest level since February 4

** Morningstar says the U.S. expansion that GYG abandoned was a 'long shot' and co's focus is returning to Australia

** Adds that market appears to be pricing in Mexican-themed fast-food chain's ambition of 1,000 Australian restaurants, yet Morningstar is more cautious, forecasting roughly 600 stores in 10 years

** The investment research firm explains scepticism by highlighting obstacles to U.S. expansion including stiff competition from Chipotle and Taco Bell. U.S. stores were not meeting targets and pace of progress did not justify further investment

** Says Australia business is holding up well despite profit warnings from retail peers since the Iran conflict

** Morningstar still confident on co's global expansion with growing Singapore and Japanese networks

** YTD, stock down 4.8% including day's move