Scott Olson/Getty Images News
Chipotle Mexican Grill, Inc. (NYSE:CMG) remains a top idea for investors at Baird Equity Research.
The firm reiterated an Outperform rating on the stock. Shares were little changed on Tuesday afternoon.
“We see an attractive near-term trading opportunity in the shares based on potential for multiple positive catalysts to emerge in the coming months,” analysts led by David Tarantino wrote in a note.
“We expect signs of strong same-store traffic momentum and further pricing actions to lead to an upward bias to EPS estimates and support robust valuation metrics on CMG heading into year-end.”
The stock has pulled back 7% since it reported second quarter earnings and has underperformed the S&P 500 by 6%.
Baird is optimistic CMG can show accelerated traffic exiting the third quarter and into the fourth quarter and a limited-time offer for the fall expected to be the fan-favorite carne asada versus last year’s disappointing garlic guajillo steak offering.
Additionally, a recent analysis of Chipotle’s pricing power suggests the company has plenty of room to raise prices to address current inflationary pressures, Bair said.
“We would not be surprised to see a low-to-mid single-digit price hike at some point in Q4, which should help to strengthen investor confidence that CMG can deliver restaurant margin above current estimates for 2024,” Baird said.
The stock has 19 Strong Buy ratings from Wall Street analysts, two Buys and 10 Holds. It has two Buy ratings from Seeking Alpha analysts, three Holds and one Sell.
CMG is up 41% year-to-date.
