There's little question that Chipotle Mexican Grill (CMG 2.41%) has changed the restaurant industry on its way to dominating the fast-casual concept it helped pioneer. The company further cemented its place in restaurant history using local sourcing and organic produce whenever possible. The results are undeniable: Its stock price is up nearly 400% over the past decade.
One Wall Street analyst believes there's more growth on the menu.
A tasty investment
Deutsche Bank analyst Lauren Silberman raised her price target on Chipotle stock to $3,300 while maintaining a buy rating on the shares. That price represents a potential gain of 18% from where the stock trades as of this writing. Silberman cited strong pricing power and consistent increases in customer visits as a "fundamental strength" that will "continue to drive share outperformance."
This comes on the heels of Chipotle's plans for a 50-for-1 stock split, "one of the biggest stock splits in New York Stock Exchange history," and gains of roughly 12,600% since Chipotle's IPO in early 2006.
Silberman is clearly onto something. Chipotle has been masterful at driving traffic with its customer loyalty program, which reached 36 million members last year. Furthermore, its Chipotlane strategy, with dedicated drive-thru lanes for digital orders, has increased sales while boosting profit margins.
In 2023, Chipotle grew revenue 14% to $9.9 billion, while diluted earnings per share (EPS) jumped 38% to $44.34. Additionally, Chipotle's comparable restaurant sales jumped 7.9%, and restaurant-level operating margin continued its relentless trek higher, climbing above 26%.
Chipotle currently sells for just over 8 times sales, so it's by no means cheap. However, the analyst also noted that "a premium is warranted" thanks to Chipotle's long-term growth outlook.
