Chipotle stock up; UBS target to $2,100 on ‘multiple catalysts’

Chipotle Mexican Grill (CMG) seems “positioned for elevated gross sales progress,” based on UBS analysts, who raised their worth goal on the burrito chain to $2,100 (U.S.) from $1,850.

Shares of the Newport Seaside, Calif., firm eventually verify have been 0.5 per cent increased at $1,837.72.

Analyst Dennis Geiger, who has a purchase ranking on the corporate, sees “additional upside’ for CMG shares “given a number of catalysts to assist continued comp momentum close to and long run, accelerating unit progress, and margin enlargement.”

“CMG seems positioned for elevated gross sales progress over the stability of ‘21 and (long-term,) given continued digital positive factors, loyalty enlargement, new menu gadgets, and an extra restoration in dine-in site visitors and throughput alternatives,” Geiger mentioned.

The worth-target improve, he mentioned, displays “ongoing gross sales momentum, expectations for little resistance to pricing will increase, and higher confidence in drivers to assist elevated go-forward gross sales progress.”

Whereas the analyst mentioned that margin pressures from labour and commodity inflation are more likely to persist close to time period, he anticipated pricing (with little resistance) and income energy can mitigate the affect to EPS.

Geiger mentioned he anticipated “strong shopper demand for not too long ago launched smoked brisket,” which ought to “assist momentum” into the fourth quarter.

“We anticipate CMG to proceed its disciplined method to menu innovation, together with the discharge of about two to a few new gadgets per 12 months, following rigorous shopper exams and suggestions within the stage-gate course of,” he mentioned.

“CMG has already launched three new merchandise this 12 months (cauliflower rice, quesadilla, and brisket) which have been nicely acquired.”

Geiger mentioned that Chipotle’s menu innovation pipeline and improvement/testing course of “ought to assist a compelling new product lineup to drive site visitors and gross sales over the approaching years.”

As well as, the analyst mentioned, Chipotle’s digital gross sales progress and contribution stay important, “representing a major gross sales unlock and bettering comfort and buyer accessibility throughout a number of gross sales channels.”

In July, Chipotle posted reported stronger-than-expected outcomes for the second quarter. The corporate is scheduled to report third-quarter outcomes on Oct. 21.

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