More than two years after the onset of the disease, customer traffic and the stock price of Chipotle Mexican Grill Inc. have declined and the company is showing signs of a turnaround that is due to a new CEO and price hikes, analysts say.
CMG, + 24.35%
reported revenue growth of 7.4% to $ 1.15 billion, revenue growth of 2.2% and a gain of $ 2.13 per share, up more than 33% year-on-year.
Equities rise 23.9% on Thursday.
The company was upgraded to Cowen results. Analysts moved Underperform's shares to market, and the price target has been raised from $ 275 to $ 350.
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"Chipotle is in the early stages of a turnaround, led by a credible CEO with abundant low-hanging fruit including marketing "Digital, and menu innovation," Cowen wrote. "Ultimately, we see opportunities to improve the menu ingredients as proprietary survey data suggests a near-qualitative perceptual perception."
Chipotle appointed former CEO of Taco Bell, Brian Niccol, as the new CEO in February, and stocks rallied immediately. The earnings announcement for the first quarter was its first for Chipotle. Taco Bell is part of Yum Brands Inc.
YUM, + 1
Niccol outlined the focus for the company's continued growth, including increased brand relevance, but said it would elaborate on a planned Internet-facing call (19659002) Cowen believes the plan, despite less details, will include "improved marketing and menu innovations."
Chipotle's last major innovation boost was the launch of queso, which suffered in social media reviews.
SunTrust analyst Robinson Humphrey believes that the upcoming call will be a catalyst for Chipotle shares, and "the excitement grows when its turnaround plans are presented."
"We expect specific targets for digital distribution (+ 20% Y / Y to 8.8% of sales in 1Q, + vs. 8,6% in 4Q17), new product initiatives (possibly linked to extended uptime) and new marketing creative (Mr. Niccol sees increased visibility among consumers as a key opportunity), "analysts write. "We also expect the announcement of store closures (less than 100 are negative cash flow), but do not expect any structural changes, such as refranchising (Mr. Niccol does not think it's an opportunity) or optimizing the balance sheet (at least at this early stage "In our opinion."
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Stifel Analysts are more reluctant.
"Given the decline in traffic and the cause of the EPS-Up, we do not believe that 1Q results show the company is on the mend, but we were encouraged by the comments of the CEO, the brand To make it more accessible and give consumers a better overview, "the analysts said.
Chipotle raised prices by 5% and saw the average check rise and same-store sales.
Stifel analysts maintained their holding-stock rating, but increased their price target from $ 275 to $ 325.
Raymond James analysts are also bearish, despite Niccol's story with Taco Bell.
We understand that Niccol's track record at Taco Bell combined with various potential improvements at Chipotle … has the potential to deliver improved results in 2019 and beyond, "said Brian Vaccaro means, we do not think there's a quick / easy way to get Comps back up in the face of current sales per square foot, and the absolute traffic level is way above industry peers and intense industry competition. "
Raymond James rates Chipotle -Aktienmarktperformance.
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Nevertheless, there is confidence that Niccol addresses the company's biggest problems.
"Speech Restructuring to Support the New One Both the strategy and the repetition of unity growth mitigate two of the most important ones Worry about margins and growth of the topline, "write Bernstein analysts who rate the chipotle share as above average.
The Chipotle share has risen 43.2% year-to-date, outperforming the S & P 500 Index
SPX, + 0.85%
which has dropped by 0.5% for this period.