Chipotle Mexican Grill stock (NYSE: CMG) got our interest as the 5th most upgraded in 2021 and the most upgraded restaurant stock. While we normally don’t subscribe to blindly following the analysts, we do like it when the analysts have the same ideas as we do.
In this case, not only is Chipotle stock getting a lot of analyst attention, we think the 2022 outlook is underestimating the company’s growth. The majority of analysts anticipate revenue to be flat on a sequential basis, maintaining a steady 22% YOY increase. Chipotle is presently recording organic growth and expansion while raising prices, yet investors underestimate the company's development, and the last earnings report proved that the company has pricing power.
Chipotle Stock Gains in Double-Digits For In 2022
Chipotle Mexcian Grill received 86 upgrades and/or price target increases in 2021 from 28 analysts. However, the consensus sentiment is only a weak Buy, which opens room for rating upgrades and price target increases. The consensus price target is $2008 or approximately 15% above recent price action. The price target has been moving higher, even if the sentiment hasn’t followed. The the last 12 months, the consensus rating is up 50%, in the last 90 days it's up 7.75% and 1.0% in the last 30. We do predict it trending higher into the first quarter of 2022 as well.
After the last earnings report, when he reiterated a buy rating and $2,150 price target, BTIG analyst Peter Saleh had this to say
"We believe the brand has ample pricing power not only to sustain margins, but to grow them in the quarters and years ahead. We expect restaurant margins to expand several hundred basis points over the coming years as the brand raises menu prices, leverages digital and loyalty, and expands its footprint with higher-margin Chipotlane restaurants. While investors were likely disappointed by the 4Q21 margin outlook, coming in about 200-250 bps below consensus, we're encouraged by sustained traffic gains in the face of double-digit menu pricing."
Chipotle Mexican Grill Embraces Digital With Chipotlanes
Even before the pandemic, Chipotle Mexican Grill was rapidly adopting digital. Chipotle has been experimenting with remodeling older stores to include digitally-focused Chipotlane drive-thrus. The Chipotlance Digital Kitchen, a drive-thru concept without seats or front-house operations, is the most recent idea that will premiere this quarter. Chipotle also has a presence in the metaverse, with the firm launching the first-ever brand for a restaurant on Roblox. The company is also working to expand the availability of vegan chorizo throughout the country, which should drive additional sales on its own.
The Technical Outlook: Chipotle Mexican Grill Is Moving Up From Support
Chipotle Mexican Grill has suffered a significant pullback from its high in the second half of 2021, but it has subsequently established a bottom. The stock bottomed in November and December 2021, and it appears to be on the verge of a rise now. Price action has regained the upswing side of the short-term moving average, which is being tested at present. Assuming the market fulfills its recent activity, we anticipate CMG to rise toward $1800 and $1900 levels in the near future before moving higher by the second half of 2022 on good performance.