Chipotle Mexican Grill is the IBD Stock Of The Day for Thursday. The fast-casual chain received a number of price target hikes early Thursday after Chipotle late Wednesday topped forecasts with strong Q1 earnings.
Chipotle Mexican Grill earnings jumped 27% to $13.37 per share adjusted, accelerating for the second quarter in a row and easily clearing FactSet views of $11.81 per share. Total revenue increased 14.1% to $2.7 billion. Analysts expected revenue of about $2.68 billion.
Comparable restaurant sales rose 7% during the quarter, driven by a 5.4% increase in transactions. The same-store sales growth beat estimates for a 5.4% increase.
Chipotle's operating margin rose to 16.3% from 15.5%. Its restaurant-level operating margin increased by 190 basis points to 27.5% for the quarter.
Chipotle guided 2024 comparable restaurant sales growth in the mid- to high-single-digit range, up from its February outlook of mid-single-digit growth. The company says it expects to open 285 to 310 new restaurants during the year, of which over 80% will have a Chipotlane drive-thru.
The guidance was in line with FactSet estimates of 7.1% same-store sales growth.
Analysts Serve Up New Targets
Deutsche Bank early Thursday said Chipotle's strong Q1 results will likely be among the best for restaurants this quarter and mark a win, even against a very high bar. The firm lifted its price target on CMG stock to $3,600 from $3,400 and kept a buy rating on the shares, according to The Fly.
Oppenheimer agrees Chipotle's earnings will likely stand out from other restaurant chains for the quarter. Oppenheimer hiked its target on CMG to $3,300 from $2,285 and maintained an outperform rating on the shares. Traffic trends heading into Q2 remain impressive around the mid-single-digit range, despite a challenging industry environment, the firm wrote.
However, BMO Capital expects the second quarter to be the peak for Chipotle's comparable sales growth for the year and sees margin expansion decelerating over the rest of 2024. Still, BMO raised its price target on Chipotle stock to $2,850 from $2,400 and kept a market perform rating on the shares based on Q1 performance.
Chipotle Stock
CMG stock jumped 6.5% Thursday to clear a 3,023.98 buy point from a three-weeks-tight pattern. The pattern could turn into a flat base after this week.
Investors could have used the push above 3,000 as an early entry.
Shares rallied more than 32% so far this year and are trading at record highs.
Chipotle leads the Retail-Restaurants Group, according to the IBD Stock Checkup.
CMG stock has a perfect 99 Composite Rating, which combines various technical indicators into one easy-to-read score. The fast-casual chain has a 98 EPS Rating. Chipotle's relative strength line is at 52-week highs and still climbing, with a 93 RS Rating.
Chipotle's board of directors on March 19 approved a 50-for-one stock split. Investors will have a chance to vote on the split during the June 6 annual shareholder meeting. CMG stock will begin trading on a post-split basis starting June 26 if the motion is approved.
Other restaurant stocks rose after Chipotle's results.
Texas-based Wingstop surged 3.6% Thursday. Shares of the chicken wing chain are trading near record highs ahead of earnings next week.
Shake Shack rose 1.2% to test its 50-day line. The New York-based burger and milkshake maker reports earnings next Thursday.
Dow Jones fast food behemoth McDonald's ticked up a fraction with results due on Tuesday.
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