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​Chipotle's shares will reach $760 by 10.11.2015
14 september 2015

Chipotle Mexican Grill (CMG), a chain of Mexican fast food restaurants, continues to deliver double-digit growth. According to the recently released report for Q2 2015, revenue jumped 14.1% y-o-y to USD 1.20 bn due to increase in LFL sales (+4.3% y-o-y) and expansion of the network. The company opened 48 new restaurants in the reporting quarter, increasing total number of restaurants to 1,878 (+11% y-o-y). Operating margin reached 19.0%, which is 1.9 pps more than in the same period last year. Adjusted EPS spiked 27% y-o-y to USD 4.45.

We are still upbeat about future prospects of Chipotle. The company continues to deliver steady growth in traffic in its restaurants due to a strong market position, frequent updates to the menu, as well as higher media coverage. Notably, Chipotle restaurants gain popularity among consumers because the food served in restaurants is healthier compared to traditional fast food. All this allows the company to raise prices without any noticeable effect on traffic.

Chipotle expects LFL sales to increase 5-7%. The company plans to open 190-205 new restaurants compared to 180-195 in 2014.

We raised target price of Chipotle shares to USD 780 and confirm a Buy recommendation in the mid-term. The short-term technical target is USD 760.

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​Chipotle's shares will reach $760 by 10.11.2015

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