This Analyst Sees Much More Upside for Chipotle After Earnings

Chipotle Mexican Grill Inc. (NYSE: CMG) released its second-quarter earnings report after the markets closed on Wednesday. Although investors sent shares lower on Thursday, one analyst disagrees and sees even more upside from here.

Currently, Chipotle stock is very expensive, at least on a fundamental basis. However, this restaurant chain operator is one that has fared better during the pandemic than the rest of the industry. With shares just below all-time highs, it is understandable that some investors may be wary, but analysts only seem to be growing more bullish.

24/7 Wall St. has included some brief highlights from the earnings report, as well as what analysts are saying about Chipotle after the fact.

The burrito chain posted $0.40 in earnings per share (EPS) on $1.36 billion in revenue, compared with consensus estimates of $0.35 in EPS and revenue of $1.33 billion. The same period of last year reportedly had EPS of $3.99 on $1.43 billion in revenue.

Wedbush reiterated an Outperform rating and raised its price target to $1,320 from $1,200. The firm believes that Chipotle is poised to see accelerated market share gains in a post-COVID-19 environment. This would result in sustained growth over pre-pandemic levels and a sustained premium relative to its pre-pandemic valuation.

Digital sales and delivery remained the primary drivers of acceleration, with orders ahead up over 140% year over year and delivery up over 125%. These were also aided by Chipotle’s loyalty program, which now has 15 million members, up from 11.5 million in the first quarter.

Looking even further ahead, Wedbush cut its 2020 EPS estimate to $10.68 from $10.81. However, the firm raised its 2021 and 2022 EPS estimates to $21.09 and $27.46 from $19.97 and $26.75, respectively.

Here’s what a few other analysts are saying:

  • Stephens reiterated an Equal Weight rating and raised its price target to $1,200 from $780.
  • Morgan Stanley reiterated it as Equal Weight and raised its target price to $751 from $688.
  • Credit Suisse reiterated an Outperform rating and raised its price target to $1,250 from $1,150.
  • SunTrust Robinson Humphrey reiterated it as Buy and raised its price target from $1,336 to $1,358.
  • Wells Fargo reiterated an Overweight rating and raised its price target to $1,282 from $969.
  • KeyBanc reiterated an Overweight rating and raised its price target to $1,300 from $1,250.

Chipotle Mexican Grill stock traded down about 2% at $1,160.16, in a 52-week range of $415.00 to $1,187.00. The consensus price target is $1,109.88.

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