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Chipotle 'Ready to Guac and Roll': Cowen Target at Wall Street High

Chipotle is 'ready to guac and roll,' according to a Cowen analyst, who raised his price target on the burrito chain.
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Chipotle Mexican Grill  (CMG) - Get Free Report is "ready to guac and roll," a Cowen analyst said, boosting his price target on the burrito chain to a Wall Street high of $2,250 from $2,080 and affirming an outperform rating.

Shares of the Newport Beach, Calif., company at last check were little changed at $1,894.65.

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Analyst Andrew Charles said in a research note that Chipotle's omnichannel presence -- featuring a 25% digital carry-out mix of sales and 24% third-party delivery mix -- "leaves [the] sales well-positioned to outperform whether the reopening narrative is faster or slower."

Charles said the company's 2021 comparable sales are well positioned to exceed consensus estimates. 

He cited a growing mix of digital sales for pickup and third-party delivery that will end 2021 at 49% of sales compared with 46% in 2020 and 20% pre-Covid-19.

The analyst also noted survey data that suggests consumer demand for transparent food sourcing is accelerating.

He also said he expected the brand to be more top of mind for consumers, due to menu innovation and an ad budget that grows in-line with sales.

In addition, Charles said the Chipotle Rewards loyalty program is showing early promise and strong growth in enrollment to 24 million active members in roughly two years.

Charles forecast that the number of Chipotlane digital-only drive-thrus will more than double to 507 locations by the end of 2020.

He said 2022 "will be another active year of innovation following recent management commentary that the business is ripe for menu innovation approximately every six months." 

"We believe brisket is set to be launched as a limited time offering before 3Q21-end, when the company laps two years of carne asada," the analyst said. 

"Looking ahead to 2022, we note the company is currently piloting plant-based chorizo."

Charles had named Chipotle as a "best idea for 2021" and pointed to the company's "symbiotic playbook focused on digital, loyalty, social responsibility and menu innovation."

Also on Wednesday, BTIG analyst Peter Saleh raised his price target on Chipotle to $2,150 from $1,850 and while keeping a buy rating, according to the Fly. 

He cited his increased confidence in the company's continued sales momentum, unit development, and margin improvement story as its new store productivity "accelerates to new highs."

On Tuesday, Wedbush analyst Nick Setyan raised the firm's price target on Chipotle to $2,150 from $1,800 and kept anoOutperform rating on the shares.

He said his checks through August point to third-quarter same-store sales growth in the mid- to high-teens percent range, above 13.6% consensus and guidance of low- to mid-teens.

In July, Chipotle posted stronger-than-expected results for the second quarter.