Chipotle ( CMG ) has won over investors, with shares up nearly 40% year-to-date against a difficult restaurant landscape as consumers turn away due to higher prices.
One analyst thinks there are more levers the fast-casual restaurant can pull to keep the flame burning long-term.
Chipotle’s increase in operating hours is leverage, wrote Bernstein analyst Danilo Gargiulo, who has an outperform rating and price target of $80 on the stock, following Wednesday’s 50-for-1 stock split.
Both Wall Street and Main Street have long anticipated the late night or breakfast from the burrito chain.
Chipotle’s loyalty program revamp could also boost sales. As chains increase personalized offerings through rewards, Chipotle can also increase its own loyalty benefits. Although the chain does not disclose how many reward members it has, digital sales represented 36.5% of total food and beverage revenue in the first quarter.
Chipotle’s core audience, Gen Z, presents a crucial runway for the company as well, as the demographic increasingly becomes household decision-makers.
Gargiulo wrote that Gen Z has a significant brand connection with Chipotle and engages more with the brand than its peers on TikTok, which tends to skew toward a younger audience, mostly 18 to 24-year-olds.
Chipotle boasts 55.4 million likes on the social media platform, while CEO Brian Niccol’s old stomping ground, Taco Bell ( YUM ), follows with 51.7 million likes. Closer behind are McDonald’s ( MCD ), with 30.1 million likes, and Wendy’s ( WEN ), with 20.6 million.
In addition to these three long-term drivers, Gargiulo noted that Chipotle’s category strength represents another tailwind for the company.
Chicken is gaining in popularity, as Yahoo Finance previously reported, and the cheaper protein is easier on consumers’ wallets, aligns with healthy eating trends and allows companies more room for innovation. Gargiulo projects that the chicken market will grow 7% over the next five years in limited-service restaurants.
The casual dining market in Latin America is also growing rapidly. It grew 8% from 2018 to 2023 and is expected to grow another 6% from 2023 to 2028.
Investors hope the momentum of recent quarters will continue. In the first quarter, Chipotle again blew out revenue, profit and same-store sales expectations.
After the stock split, Chipotle’s stock still trades at a higher price than when the company went public in 2006 at $22 per share. The stock has hovered around $62 per share since Thursday’s market close.
In a note to clients, TD Cowen analyst Andrew Charles wrote that the firm believes Chipotle is “well-positioned to deliver mid-single-digit same-store sales annually over the medium term,” driven by its all-in-one approach , Chipotlane’s innovation. and consumer interest in ingredient transparency. Charles now has a $72 price target on the stock.
Typically, stock splits are bullish for the companies that perform them. As Yahoo Finance’s Seana Smith reported after Nvidia’s ( NVDA ) 10-for-1 stock split earlier this month, stock splits tend to see an average one-year return of 25% versus about 12% for the broader market , according to the Bank’s analysis. of America.
Year-to-date, Chipotle shares are up 38%, outpacing the S&P 500’s ( ^GSPC ) 15% gain.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow him on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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