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Raymond James Likes Chipotle, Calls It a 'High-Quality Growth Story'

Chipotle 'nimbly navigated the COVID-19 pandemic,' Raymond James analysts say.
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Chipotle Mexican Grill  (CMG) - Get Chipotle Mexican Grill Inc. Report was upgraded to outperform from market perform by analysts at Raymond James, who said the Mexican fast-food chain is "among the highest quality growth stories in our universe."

Shares of the company, from Newport Beach, Calif., were up 1.5% to $1,554 at last check after hitting a 52-week high earlier in the session.

"We believe the company's sales have fully participated in strengthening industry trends over the last four weeks, likely pushing recent average weekly sales (AWS) in excess of $50K,"  said analyst Brian Vaccaro, who established an $1,800 price target.

Vaccaro said he was raising his first-quarter earnings estimate for Chipotle by $1.09 to $5.52 a share, above the Wall Street mean of $4.82. 

The company is scheduled to report first-quarter earnings on April 21. Vaccaro also raised his 2021 earnings estimate by $4.83 to $26.40 a share.

The analyst said that Chipotle is "a high -quality growth restaurant company with multiple company-specific sales drivers," including menu innovation and a leveraging loyalty program. 

"The company nimbly navigated the COVID-19 pandemic, revealing the strength/flex of its business model and strong operations, while also accelerating digital adoption," Vaccaro said.

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In addition to Vaccaro, JPMorgan analyst John Ivankoe maintained Chipotle at neutral and raised the price target from $1,350 to $1460.

Baird analyst David Tarantino reiterated his outperform rating and $1,750 price target on Chipotle, saying he believes that Chipotle's new products can act as a catalyst for consumer engagement and fuel accelerated brand momentum.

Jim Cramer, TheStreet's founder, said on CNBC Monday that he believes shares of Chipotle have room to run higher because the fast-casual restaurant chain is well-positioned to capitalize on the U.S. economy’s Covid recovery.

"A lot of states in this country are beginning to scrap the social distancing rules," Cramer said. "The winner here will be the company that had great numbers beforehand, making the most money beforehand, and it's Chipotle."

Last week, analysts at Truist raised their price target on the burrito giant to $1,750 from $1,700 and affirmed a buy rating.

The company recently invested in a $500 million Series C funding round for Nuro, a service that operates a fleet of occupant-free, self-driving robotic vehicles for food delivery.

Last month, Chipotle said it plans to open eight new locations in Canada over the next year.