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Why Chipotle Mexican Grill, Inc. Stock Popped Today

By Steve Symington - Feb 20, 2018 at 4:07PM

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The burrito chain is receiving some love from Wall Street. Here's what investors need to know.

What happened

Shares of Chipotle Mexican Grill Inc. (CMG -1.89%) climbed as much as 5.4% early Tuesday, then settled to trade up 3.6% as of 3:30 p.m. EST as multiple analysts upgraded the stock of the fast-casual Mexican restaurant.

So what

To start, on Monday Stifel analyst Chris O'Cull upgraded his firm's rating on Chipotle stock from sell to hold, increasing his per-share price target by $25 to $275 -- though that's still a discount to Chipotle's current $318 price. To justify his relative optimism, O'Cull noted that "new investors are taking a more optimistic view of the company's prospects" following Chipotle's hiring of former Taco Bell head Brian Niccol as its new CEO. Still, while that optimism should help prop up Chipotle's stock price, O'Cull prefers to remain on the sidelines as Niccol implements his plan to reverse Chipotle's declining traffic and margin trends.

A cup of Chipotle queso next to a bag of tortilla chips

IMAGE SOURCE: CHIPOTLE.

If that weren't enough, this morning Credit Suisse followed by maintaining its neutral rating on Chipotle stock, but also increasing its per-share price target by $15 to $290. Credit Suisse largely echoed Stifel's sentiment, speculating that the new CEO brings opportunities for new store growth as well as a recovery in both sales and margins.

Now what

Perhaps the timing of these positive calls shouldn't be surprising. Though Chipotle stock did pop immediately after its CEO announcement last week, it still hadn't fully recovered after its fourth-quarter report left investors underwhelmed earlier this month.

So barring an unscheduled update in the coming weeks, investors will likely need to wait until Chipotle's next quarterly release in late April for a taste of whether its turnaround is progressing as hoped. Given these tempered votes of confidence in the meantime, it's hard to blame investors for bidding up the stock today.

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Stocks Mentioned

Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
CMG
$1,306.58 (-1.89%) $-25.13

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