Shares of the quick-service restaurant chain operator Chipotle Mexican Grill (NYSE:CMG) are up about 72% in one year, outperforming the S&P 500’s (SPX) nearly 27% gain. Further, the stock has increased by over 27% year-to-date. Despite this notable growth, Citi analyst Jon Tower sees more room to run. The analyst is bullish about CMG stock and raised the price target to $3,358 from $3,016, implying 15.58% upside potential from current levels. Tower is a five-star analyst with a success rate of 80% on CMG.
In a note to investors dated April 5, Tower expressed confidence in CMG’s ability to exceed analysts’ revenue projections for the first quarter. The company’s initiatives to boost throughput during peak periods, menu innovation, and ongoing strength in the digital sales channel are key factors driving analyst’s optimism. Tower added that CMG’s growing footprint and high EPS growth justify its premium valuation compared to the historical average.
Chipotle will release its Q1 earnings results on Wednesday, April 24. Analysts expect CMG to post revenue of $2.65 billion in Q1, reflecting a year-over-year increase of 12.8%. Further, Wall Street forecasts earnings of 11.47 per share, up from $10.5 in the prior-year quarter.
What is the Future of Chipotle Stock?
Chipotle’s focus on menu innovation, efficient throughput, and the opening of new restaurants has propelled its revenue and margins. However, as CMG stock has gained significantly, Wall Street is cautiously optimistic about its prospects.
Chipotle stock has 20 Buys and seven Hold recommendations for a Moderate Buy consensus rating. Further, the average CMG stock price target of $2,866.70 implies about 1.33% downside potential from current levels.
