Shares of Chipotle Mexican Grill (NYSE:CMG) are trading higher by 1.505 in the early morning as an analyst at UBS upgrades the stock to Buy citing EPS upside, growth opportunity.
Analyst Dennis Geiger said, “We are upgrading shares of CMG given: increased visibility into a compelling multi-year growth opportunity (+24% EPS CAGR ’22-’24), upside to Consensus earnings (+7% above ’22 EPS), and a risk/reward (3:1) which skews significantly to the upside following the recent pullback. We see near-term catalysts to reaccelerate sales trends from increased dining room volumes as consumer mobility grows and elevated digital sales are retained, upcoming pricing increases, and new product & loyalty contribution.
Longer term, we expect a further narrowing of the restaurant margin (RLM) / AUV gap and accelerating unit growth (7%+) are drivers of meaningful earnings power. Additionally, multiple growth opportunities remain underappreciated and could support upside over time, including LT contribution from Chipotlanes, potential for growing repurchase activity, and int’l unit expansion. Following a deeper dive into margin potential and pricing power, we raise our PT to $1,700 (from $1,575) on increased est.”
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