Can Chipotle Mexican Grill Stock Live Up To Upgrade?

While Chipotle Mexican Grill, Inc’s CMG stock has been under pressure since mid-April with weakness in growth, the company’s same-store sales prospect for the long term is “better than it ever has been,” given the rising mix of digital sales, according to Stephens.

The Chipotle Mexican Grill Analyst: James Rutherford upgraded the rating for Chipotle Mexican Grill from Equal-Weight to Overweight, while raising the price target from $1,600 to $1,700.

The Chipotle Mexican Grill Thesis: The company has 19% locations as freestanding, while 64% are endcaps, Rutherford said in the upgrade note.

“Our analysis shows that 400 - 480 of these are candidates for a Chipotlane retrofit,” he noted.

“Between conversions and new unit growth, we see a path to a 45% Chipotlane unit mix by 2030, yielding material financial benefits,” the analyst wrote.

“Our deep analysis of the CMG footprint shows that it is very well positioned for growth: excellent demographics, low urban core exposure, strong presence in the suburbs, an opportunity to grow in outside towns, very low closure rates across all vintages, etc.,” he added.

Rutherford noted there is now “new optimism around both near- and longer-term drivers.”

CMG Price Action: Shares of Chipotle Mexican Grill had risen by 1.14% to $1,361.12 at the time of publication Thursday.

(Photo: Chipotle)