Chipotle Mexican Grill (NYSE:CMG) is hitting all-time highs after another blowout earnings report, and one Wall Street pro sees the shares cracking the triple-digit ceiling. Katherine Fogertey at Goldman Sachs is initiating coverage of the resurgent burrito chain with a bullish conviction buy rating. She is setting a Street-high price target of $1,000 on the stock, presenting a little more than 28% of near-term upside to the investment. 

Fogertey concedes that the stock has been a sector laggard since the food-borne illness outbreaks at the chain began nearly four years ago. The stock's been on fire if you draw the starting line where it bottomed out early last year -- more than tripling along the way -- but it wasn't until this month that the shares finally took out the all-time highs it hit in late 2015. Fogertey is tapping Chipotle as her top stock in the restaurant space, an industry that she feels is benefiting from several trends including strong consumer spending, digital engagement, and the growing popularity of food-delivery apps that is boosting both the number of transactions and the size of those transactions. 

Interior of an empty Chipotle in California.

Image source: Chipotle Mexican Grill.

Rolling with the changes

There's no denying the turnaround at Chipotle. Revenue rose to a better-than-expected $1.4 billion in last week's second-quarter report, 13% ahead of where it was a year earlier. The chain was certainly growing faster in its prime, but this is now the third consecutive quarter of double-digit percentage growth. You have to go back four years -- when we were at peak Chipotle -- to find the last time that the fast-casual pioneer came through with three straight periods of better than 10% top-line growth.

Comps soared 10% for the quarter, and most of that gain came from digital sales that have nearly doubled to account for 18.2% of total sales. Chipotle is benefiting from the gig economy, as fast-growing upstarts specializing in mobile delivery and takeout orders are creating new revenue streams for restaurant chains. The best part of the trend is that the losses typically involved with ramping up delivery are being driven by the venture capital-fueled start-ups in the cutthroat delivery apps niche. Margins are improving, and adjusted earnings per share shot 39% higher in last week's report. 

Chipotle now sees comps rising in the high single digits for all of 2019, the second time in a row that it has boosted its same-store sales guidance. This was going to be an important report, especially with its Chipotle Rewards loyalty program launching nationally in March. With the chain also testing out new items, it doesn't seem as if it's willing to rest on its laurels. It took nearly four years for Chipotle to hit fresh all-time highs. With momentum on its side, it will likely take a lot less time for the stock to break north of $1,000.   

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