An Early Wall Street Reaction To Chipotle's CEO Announcement

Chipotle Mexican Grill, Inc. CMG confirmed Wednesday morning that it has decided to search for a new CEO to replace the company's founder Steve Ells.

The Analyst

Oppenheimer's Brian Bittner maintains a Perform rating on Chipotle's stock.

The Thesis

Chipotle's decision to seek a new CEO appears to be a "very reasonable move" and could usher in a better long-term success profile, Bittner said in a brief note. (See Bittner's track record here.) 

"This represents an attempt to find a new leader with the turnaround and operating track record needed to improve CMG's unit economics," the analyst said. 

On the other hand, Chipotle's announcement raises some questions regarding the state of the business, Bittner said. In addition, there is no clarity as to what new performance bars will have to be set for a new CEO, and the timeline is also a question mark at this point, the analyst said. 

Finally, the restaurant stock's current valuation of 32x next year's earnings per share may be too rich to recommend the stock, especially at a time when it is hard to see an upside case to the Street's EPS estimates through 2019, Bittner said. 

Price Action

Shares of Chipotle were trading higher by more than 3 percent Wednesday afternoon.

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