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This fiscal year, Chipotle Mexican Grill expects to open 200 new locations.
Getty Images/By Brandon Bell
The most bullish analyst on Wall Street is upbeat about the financial outcomes.
Chipotle Mexican Grill is a chain of Mexican restaurants.
Based on interactions she had with management before the end of the quarter, she will post in two weeks. Piper Sandler’s Nicole Miller Regan has maintained an Overweight rating on Chipotle Mexican Grill (ticker: CMG) with a $2,100 price objective, the highest among the 32 analysts tracked by FactSet.
On July 20, the burrito chain will release its fiscal second-quarter earnings. Miller Regan feels the quarter’s consensus expectations can be met: She expects a 28 percent increase in same-store sales and $5.77 in earnings per share. Even so, good outcomes aren’t always enough to boost a company’s stock price. Following the company’s strong first-quarter earnings in late April, shares generally meandered lower for roughly a month. “To be honest, Chipotle shares aren’t a ‘reopening trade,’ and they can’t benefit from the largest percentage rebound gains,” she says. Miller Regan, on the other hand, believes that Chipotle’s concentration on profitably boosting sales and maximizing earnings power over time will eventually benefit the stock. The analyst cites the company’s development pipeline, which is slated to add 200 new locations this fiscal year; she believes that number might rise to 250, according to another high-end Street estimate. Stores with drive-through Chipotlanes, which tend to have better sales volume and profitability, will also be a source of upside, according to her. Overall, she writes, typical site volumes of $2.5 million “are swiftly being realized, and the conversation is now shifting to the brand’s ability to create revenues in the $3 million and higher ranges.” Looking ahead, Miller Regan believes Chipotle has the potential to become a top 10 global brand, and that foreign expansion will be a long-term source of growth. Chipotle is now her “highest conviction investment recommendation,” with the company “poised to become the dominating large-cap restaurant growth stock,” according to her. Chipotle was down 0.2 percent to $1,565.14 in noon trade on Tuesday. The stock has gained over 13 percent this year and 39 percent in the last 12 months. Chief Executive Officer Brian Niccol was named one of Barron’s top CEOs for 2021. Teresa Rivas may be reached at teresa.rivas@barrons.com./n
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