Chipotle Mexican Grill, one of the most popular fast-food chains in America, will be coming up with its earnings in the coming week. It seems their digital platform for ordering food has helped them stay put and rather earn well even during the pandemic looming over our heads still.
As Wall Street analysts are raising the bar for the stock, it has also been reported that Chipotle’s stocks have soared by 60% in the current year. The earnings to be revealed in the coming week will prove the same, while the digital platform has helped a lot in making that happen.
As more and more people are avoiding dining in a restaurant currently, options like Chipotle have become popular with the younger age group, especially. The company has benefited a lot even during the difficult time that has been brought forward.
Chipotle currently isn’t just doing well but keeping the customers on their toes. Carne Asada, which was launched back in 2019, was brought back to the menu, driving sales growth in 2020 as it did when the item was launched earlier.
Analysts have been looking over the stocks, and Credit Suisse analyst Lauren Silberman raised her price target expecting the stocks to do better later. She expected 8.4% sales growth in the third quarter of this year, which was ahead of Wall Street’s 7.2% estimation. She also makes a very important note that the digital sales mix for the company went up to 61%.
Silberman explains the reason for the rise in stock in her statement, “Chipotle is well suited for digital given its younger and more affluent consumer base, on-trend positioning, food that travels well and transportable packaging.” She also adds that currently, Chipotle is being viewed as one of the companies with maximum potential to capitalize through their digital front.
The tough competition will still exist for the company, and the bar is constantly being raised higher for them. The next few months will be challenging for them in terms of sales growth. The more innovative they get with their menu and sales, the better they are expected to do. Last year, their fourth-quarter sales growth was 13.4%, and it would be a surprise to see them cross that despite everything.
KeyBanc Capital Markets analyst Eric Gonzalez also raised his price note target from $1300 to $1475. He says that Chipotle exhibits a lot of strength in the post-pandemic world. He explains why in his statement, “We believe Chipotle’s digital sales are proving to be sticky and new customers are increasingly entering the brand through these channels.”
Gonzalez also expects the restaurant margins to go up to 21% this year in comparison to 20.2% in the last year. Even though margin potential has been held back for a while, there’s still a lot that could be done digitally, he explains.