Chipotle dazzles analysts with sales growth: Chipotle Mexican Grill’s stock has been falling recently, but Piper Sandler believes the burrito chain’s price can still rise.
Chipotle (ticker: CMG) received an Overweight rating from analyst Nicole Miller Regan, who raised her price objective to $2,100 from $2,000. Her goal is the highest among the 33 analysts who watch the stock, and the only one over $2,000, according to FactSet data.
In early trade, the stock was up 1% to $1,355. The stock is down 3.2 percent year to date, but it has risen 44 percent in the last year.
Miller Regan observed, “It is becoming increasingly obvious that Chipotle is shifting from a nascent concept to one with mass appeal.” “As a stock, we believe CMG shares are the most attractive large-cap growth investment opportunity in the restaurant industry.”
Despite the fact that the company did quite well throughout the pandemic, Regan believes it will continue to gain when the economy improves. Nondigital sales are approaching $1.2 million per site on average, according to her estimates, approximately half of the pre-pandemic peak of $2.5 million. She noted that her projection of $2.70 million for 2022 sales may prove to be too modest, as widespread immunizations allow more people to go out and dine at restaurants.
She is also optimistic about the company’s capacity to improve margins, given that it is rising pricing while maintaining relatively steady marketing costs. Despite the danger of increasing commodity costs, Miller Regan raised her estimates for earnings per share until 2022.
Late in April, Chipotle released a positive earnings report. It said earlier this week that it would raise wages at its restaurants to an average of $15 an hour, a move that analysts praised as employers struggle to fill vacancies. On Thursday, McDonald’s (MCD) announced its own salary rise.