Chipotle Mexican Grill, Inc. CMG deserves credit for its "impressive" resiliency during the COVID-19 pandemic, and the casual fast food restaurant chain should benefit from recent momentum in 2021, according to Stifel.
The Analyst: Chris O'Cull upgraded Chipotle Mexican Grill from Hold to Buy with a price target lifted from $1,400 to $1,500.
The Thesis: The pandemic accelerated the growth of digital ordering and delivery options, and this was apparent in Chipotle's performance, O'Cull said in an upgrade note.
Most notably, digital sales rose from 19.6% of total sales in the fourth quarter of 2019 to 49% of total sales. Over the same time period, Chipotle Rewards members doubled in size to 17 million.
The company noted that customers who take advantage of delivery options are more likely to develop an affinity to the Chipotle brand and will take advantage of other more profitable sales channels, the analyst said.
"We anticipate the unprecedented growth in users will
accelerate the company's ability to effectively message key cohorts, such as new and lapsed users, to drive additional visits and support comparable sales growth," he said.
Chipotle's drive-through channel, "Chipotlanes," is in the early stages of growth and is performing "on par with or ahead of" quick-service burger chains that spent many years building and emphasizing their drive-thru presence, O'Cull said.
Looking forward to 2021, Chipotle's momentum on multiple fronts will help generate sales growth, especially when the company introduces new menu items that are undergoing testing, like cilantro-lime cauliflower rice, smoked brisket and items exclusive to digital orders like quesadillas, the analyst said.
CMG Price Action: Shares of Chipotle Mexican Grill were trading higher by 5.08% Wednesday morning at $1,416.02.
Photo courtesy of Chipotle.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.