Wedbush analyst Nick Setyan lifted his price target on Chipotle Mexican Grill (NYSE:CMG) by 38% on Monday. He reiterated his outperform (buy) rating on Chipotle's stock, while raising his price target from $870 to $1,200.

He argues that the company will be able to take a more measured approach to reopening its dining rooms as the pandemic subsides, largely based on the continued strength of Chipotle's online sales. His more bullish prognostication reflects his increases in the company's earnings per share estimates for 2020 and 2021.

A Chipotle burrito with a side of chips and guacamole.

Image source: Chipotle.

The analyst cited the burrito purveyor's strong digital track record, saying Chipotle has the luxury of taking its time. "We sensed that Chipotle may be taking a more conservative approach to opening dining rooms as solid off-premise sales trends allow management to further hone their dine-in operating procedures," he said. Additionally, Setyan noted, Chipotle's solid execution during the pandemic opens the door for the fast-casual restauranteur to "open in-line with relevant local capacity constraints fairly rapidly."  

Setyan also noted that locations that have reopened are already seeing brisk demand, which could lead to same-store sales gains in the coming quarter. "We view the relative strength of Chipotle's current [comparable-store sales] trajectory as further evidence of [its] ability to capitalize on accelerated digital/delivery adoption," he said.

There's certainly data to back up Setyan's bullish call. In the first quarter, even as the pandemic gained traction, Chipotle's comparable sales grew 3.3% year over year, while digital sales grew 81% and accounted for more than 26% of the company's total revenue.

It's also important to note that Wedbush is a little late to the game, lifting its price target after Chipotle shares had already crested $1,000 per share. The stock is up 25% so far this year due to its performance and if its solid execution continues, Chipotle could gain even more in the coming year.