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UPDATE: Belus Capital's Sozzi Upgrades Chipotle to Buy, Wants Investors to Chow Down on Shares

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Belus Capital's Brian Sozzi upgraded shares of Chipotle Mexican Grill, Inc. (NYSE: CMG) from Hold to Buy in a research note Wednesday morning. The analyst raised his price target from $500.00 to $600.00.

Sozzi's note follows fourth-quarter results from Chipotle on January 30th. The analyst highlighted an attractive PE multiple and call action which is signaling the stock is "destined to hit $1,000," arguing "Chipotle is in the good graces of Wall Street, deservedly so."

The Belus Capital analyst cited a number of near-term and longer-term fundamental justifications for the Street's optimism. Sozzi sees strength today due to:

  1. increasingly quicker line throughput (during peak times people are getting onto, and off of, the line faster);
  2. intensely positive customer response to new restaurant locations (could see this via photos on a Chipotle keyword search on Twitter); and
  3. a switch to a non-GMO menu that in our view has begun to already appear in same-restaurant sales (people feel better about eating at Chipotle and share with others, personally or on social media, that positive experience).

Sozzi sees strength in the future due to:

  1. an accelerated pace of domestic new Chipotle openings;
  2. a careful introduction of new menu items (sofritas; we expect some form of broader breakfast platform in short older);
  3. the start of a restaurant remodeling campaign to stay fresh and relevant, and capture more of the post-work crowd;
  4. a high probability of a menu price increase of 3%-5% by mid-2014 that bolsters same-restaurant sales and more than counteracts food inflation and ingredient (GMO initiative) investment;
  5. new concepts are being rolled out thoughtfully as to preserve the cultural element that has made Chipotle successful; and
  6. investments in mobile payment that will further speed up throughput.

Chipotle shares are trading up about 0.3 percent to $546.50 ahead of the opening bell. Sozzi's new price target represents potential upside of about 10 percent from where the stock is currently trading.

Latest Ratings for CMG

DateFirmActionFromTo
Apr 2019DowngradesOverweightEqual-Weight
Apr 2019MaintainsMarket PerformMarket Perform
Apr 2019DowngradesBuyHold

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Posted-In: Analyst Color News Upgrades Price Target Analyst Ratings

 

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