Chipotle Mexican Grill's Q4 'Was A Clean Beat,' 9 Analysts Provide Key Takeaways

Shares of Chipotle Mexican Grill, Inc. CMG climbed in premarket trading on Wednesday, after the company reported better-than-expected fourth-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Stephens analyst Joshua Long maintained an Overweight rating, while lifting the price target from $2,800 to $3,000.
• Truist Securities analyst Jake Bartlett reiterated a Buy rating, while raising the price target from $2,700 to $2,920.
• BMO Capital Markets analyst Andrew Strelzik reaffirmed a Market Perform rating, while lifting the price target from $2,100 to $2,400.
• Stifel analyst Chris O'Cull maintained a Buy rating, while raising the price target from $2,560 to $2,700.
• Baird analyst David Tarantino reiterated an Outperform rating, while lifting the price target from $2,650 to $2,850.
• KeyBanc analyst Eric Gonzalez reaffirmed an Overweight rating, while raising the price target from $2,250 to $2,750.
• Morgan Stanley analyst Brian Harbour maintained an Equal-Weight rating, while raising the price target from $2,284 to $2,500.
• BofA Securities analyst Sara Senatore reiterated a Buy, while lifting the price target from $2,700 to $3,000.
• Wedbush analyst Nick Setyan reaffirmed a Neutral rating and price target of $2,400.

Check out other analyst stock ratings.

Stephens: “Chipotle reported better-than-expected 4Q23 results across all major line items,” Long wrote in a note.

Although the company’s sales were impacted by adverse weather conditions in January, there has been a rebound, the analyst stated. “Chipotle remains well-positioned to offset the longer-term impact from rising labor costs through a balance of menu price, technology/automation investments, and operational execution initiatives."

Truist Securities: Chipotle delivered an earnings beat on same-store sales and restaurant-level margins (RLM), Bartlett said.

“CMG is driving industry leading traffic (+7.4% in 4Q23) primarily via improved throughput as demand remains strong across customer income levels, giving us confidence that traffic will continue to grow with strong execution, irrespective of the macro environment,” the analyst wrote. He also expressed optimism around the company being able to expand margins in 2024, despite labor cost headwinds.

BMO Capital Markets: Chipotle reported earnings of $10.36 per share, which exceeded Street expectations by 65 cents per share, “driven by stronger comps and restaurant margins,” Strelzik said.

“CMG introduced incremental 2024 guidance metrics including mid-single-digit comp growth (in-line with consensus),” the analyst wrote. “We believe CMG is poised to sustain strong growth in a challenging environment, see visibility to accelerating development, and expect ongoing margin expansion over time,” he added.

Stifel: Chipotle's transactions grew by more than 7%, significantly beating the average consensus estimate of 5.7%, O'Cull stated.

“The traffic-driving efforts were textbook—recycle a popular limited-time offer, like Carne Asada, generate greater demand with more effective advertising, and increase throughput so customers get down the line faster,” the analyst wrote. “Moreover, Chipotle's strong value proposition positions it well to continue outperforming."

Baird: Chipotle’s fourth-quarter results came in better than “healthy estimates,” Tarantino said. The company’s impressive transaction momentum suggests that its “sales-driving initiatives are gaining meaningful traction, providing visibility to the fundamental outlook for 2024,” he added.

“With anticipated inflation in commodities and labor likely to be largely offset with pricing actions, commentary suggested opportunity for restaurant-level margin to expand from 2023's 26.2% (and perhaps reach/exceed 26.7% consensus) if positive transaction momentum continues,” the analyst further wrote.

KeyBanc: “Chipotle’s 4Q23 results included EPS, SSS growth, and store-level margins that exceeded expectations driven by industry-leading transaction growth,” Gonzalez wrote in a note.

“The Company continues to expect 285-315 new stores this year and ~10% by 2025,” he added.

Morgan Stanley: “4Q was a clean beat, to that point, with 8.4% comps (7.4% of that traffic) ahead of expectations in the 7-8% range, EPS ahead on better store margins/sales leverage, and unit development hitting annual targets,” Harbour said.

“Expectations have been healthy lately and the story is appreciated and little debated today, but this solid performance can likely support the stock, even if not thesis changing,” he added.

BofA Securities: “After two years of elevated inflation across virtually every expense line, CMG is finally seeing leverage commensurate with SSSG,” Senatore wrote.

“We typically anticipate ~20 bps of margin expansion per point of transaction growth,” the analyst said. “CMG’s 140 bps of RLM expansion y/y on 7ppts of transaction growth in 4Q fits squarely within that framework.”

Wedbush: Chipotle reported Q4 earnings ahead of expectations on same-store sales growth and underlying margin beat, Setyan said.

"Management expects 2024 SSS growth in the MSD range vs. consensus of 5.4%," the analyst said. While the company’s 2024 same-store sales growth guidance came in-line with expectations, “we remain cautious beyond Q1."

CMG Price Action: Shares of Chipotle had risen by 8.53% to $2,700.00 at the time of publication on Wednesday.

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