Chipotle Mexican Grill (CMG) - Get Report shares are rising after Cowen, citing potential in digital sales, upgraded the Mexican restaurant chain to outperform from market perform and lifted its target price 21%.

Cowen's new target, $970 a share, up from $800, indicates a potential 23% upside from the stock's Monday close at $786.51. 

The firm expects digital sales, which include sales from pickup and third-party-delivery services like Uber (UBER) - Get Report Eats and DoorDash, to nearly double in the next five years, to 34% of sales from 18% today, according to analyst Andrew M. Charles wrote. 

Those rising digital sales will result in side benefits like fatter restaurant margins, improved customer data and more efficient labor deployment, the analyst said.

"The digital strategy will be further enhanced in the coming years from a new digital drive-thru format, known as Chipotlane, that we expect to further drive digital sales mix and enhance new store return on investment," he said.

"Along with greater proficiency harnessing data from 2019's loyalty program launch, we view our five-year digital target as a checkpoint, not an end point."  

Cowen raised its same-store-sales-growth estimates for fourth-quarter 2019 and for 2020 and 2021 to 11%, 6.6% and 6.5%, respectively, from 9%, 6% and 5%.

The firm expects digital sales to fuel 80% of the company's comparable-store-sales growth. 

"Unlike most competitors, virtually every Chipotle location has a second assembly line to provide capacity for digital orders," Charles wrote. Those separate lines "are now fully digitized for faster prep times." 

Chipotle's stock has been a major recovery story, rising more than 70% over the past 12 months. 

Chipotle shares are trading up 3% to $809.83 on Tuesday.