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a pandemic favorite, hasn’t fared as well in 2021. Shares have been drifting lower in recent months, following the burrito chain’s fiscal first-quarter earnings report, but Piper Sander says there is still reason to be upbeat.
Analyst Nicole Miller Regan reiterated an Overweight rating and a price target of $2,100 for Chipotle stock (ticker: CMG), saying it remains her top pick for the year following recent meetings with management. Despite the stock’s recent performance, “there appears [to be] almost no issue from the perspective of broad-based consumer demand which continues to strengthen,” she wrote in a research note.
Chipotle stock was flat in early trading at $1,326.34. The shares are off 4.4% year to date, although they have gained 26.4% in the past 12 months.
The Piper Sandler analyst said the company’s store-expansion efforts are back post-Covid and gaining momentum, with 200 locations slated to open this year, a figure that could prove conservative. Chipotle is complementing that effort by also investing in other sales channels—including its Chipotlane drive-throughs. Stores offering drive-through sales have been doing significantly higher business than locations without it, according to the company.
Looking ahead, Chipotle will soon be rolling out its first digital-only restaurant, testing carside pickup at about 30 stores, and testing digital only items such as a recently launched quesadilla.
The Piper Sandler analyst is also upbeat about the company’s growing international presence, even if sales overseas have been held back lately by the lingering threat of Covid-19. In May, she raised her price target to a new high for Wall Street. Other analysts have also highlighted the stock’s recent underperformance as a buying opportunity.
Write to Teresa Rivas at teresa.rivas@barrons.com
