More than two years after outbreaks of disease sank customer traffic and the share price of Chipotle Mexican Grill Inc., the company is showing signs of a change in the chief executive and price hikes, say the analysts.
CMG, + 24.19%
reported an increase of 7.4% in revenues to $ 1.15 billion, an increase of the same stores of 2.2% and gains of $ 2.13 per share, up to more than 33 % year after year.
Shares increased 23.9% in Thursday's trading.
The company was improved in Cowen after the results. Analysts moved shares to market performance below performance, and the target price rose to $ 350 from $ 275.
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"Chipotle is in the early stages of a turnaround, led by a credible CEO with a wide range of fruits including marketing, digital innovation, and menu," Cowen wrote. "Ultimately we see opportunities to update the ingredients of the menu, since the proprietary survey data indicate food quality perceptions almost at the minimum level."
Chipotle named former Taco Bell boss Brian Niccol as its new CEO in February and the stock recovered immediately. The first quarter earnings announcement was the first for Chipotle. Taco Bell is part of Yum Brands Inc.
YUM, + 1.81%
Niccol outlined the areas of focus for the company's continued growth, including the relevance of the brand, but said it will go into more detail about a previously planned call of the next earnings announcement.
Despite some details, Cowen thinks the plan will include "better menu and marketing innovation."
The last great innovation impulse of the Chipotle menu was the launching of cheese, which was criticized in social networks.
SunTrust analysts Robinson Humphrey believe that the next call will be a catalyst for Chipotle's actions and "enthusiasm will grow as its restructuring plans are announced."
"We expect specific targets for digital sales (+ 20% Y / Y) 8.8% of sales in 1Q, + vs. 8.6% in 4Q17), new product initiatives (potentially connected to extended operating hours) and new marketing creatives (Mr. Niccol considers greater visibility with consumers as a key opportunity), "the analysts wrote. "We also expect the announcement of store closures (less than 100 are negative in cash flow), but we do not expect any structural changes, such as refranchising (Mr. Niccol does not believe it is an opportunity) or optimizing the balance (at least in this first stage, in our opinion). "
SunTrust qualifies the shares of Chipotle purchase and raised the target price to $ 410 from $ 380.
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Stifel analysts are more reserved.
"Given the decreases in traffic and the cause of the increase in EPS, we do not believe that the 1Q results indicate the company is on the road to recovery, but we are encouraged by the CEO's comments about making the brand be more accessible and top-level for consumers ", wrote the analysts.
Chipotle raised prices around 5%, which caused an increase in average verification and sales in the same store.
Stifel analysts maintained their recommendation to hold stocks, but raised the target price to $ 325 from $ 275.
Raymond James analysts are also bearish, despite Niccol's story with Taco Bell.
We recognize that Niccol's success story at Taco Bell combined with several improvement opportunities at Chipotle … have the potential to drive better results in 2019 and beyond, "wrote analysts led by Brian Vaccaro. , we do not believe there is a quick / easy solution to re-accelerate sales given current sales per square foot and absolute traffic levels are well above industry competitors and intense industry competition. " Raymond James rates Chipotle's stock market performance.
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Still, there is confidence in that Niccol will address the company's biggest problems.
"Talking about restructuring to support the new strategy and reiterating the unit's growth alleviate two of the The most important concerns about margins and growth, "wrote Bernstein's analysts, who rated Chipotle's shares as better.
Chipotle shares rose 43.2% so far this year, surpassing the S & P Index 500
SPX, + 0.85%
which has fallen by 0.5% for the period.