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Chipotle Mexican Grill (NYSE:CMG) traded higher on Thursday, with the restaurant operator less than two weeks away from reporting Q1 earnings.
Cowen expects a clean quarter from Chipotle (CMG) and raised its same-store sales estimate to +4.5% from +3.5%. Analyst Andrew Charles leaned on the firm’s with proprietary survey data that suggested Chipotle’s (CMG) value perceptions are outperforming the fast casual peer group at a widening clip. Crucially, Charles said the data indicates that Chipotle’s (CMG) recent price increases are not being met with material traffic resistance.
Cowen also increased its 2024 same store sales estimate to +5.5% from +5.0%. “Our raised 2024 estimate is mostly driven by increasing our 1Q and 2Q estimates following the announced return of the successful Chicken Al Pastor,” noted Charles. He added that Google Trends data suggests search volume for Chipotle’s (CMG) Chicken Al Pastor is only slightly below last year’s level.
Adding it all up, Cowen lifted its price target on CMG to $3,400 based on a peak multiple. Charles said the rich valuation is justified by confidence in 2024 positive traffic that provides a scarcity value in the restaurant industry, Chipotlane’s near peak new store economics, and the clear path to returning to the high end of 8%-10% new store growth in 2025.
Shares of Chipotle (CMG) were up 1.05% in late trading on Thursday. The restaurant stock is up more than 30% on a year-to-date basis. Seeking Alpha analysts Mike Zaccardi and JR Research recently warned on CMG’s valuation.
