Chipotle Mexican Grill (CMG) sales are expected to accelerate in H2, supporting upside potential for the stock after a soft H1 largely due to macroeconomic pressures and tough annual comparisons, UBS Securities said Thursday in a report.
New menu items, better marketing and improved service speed may underpin a pickup in customer traffic and sales, UBS said.
While Q2 margins may have been squeezed by slower sales and higher marketing costs, profitability is expected to bounce back in H2 thanks to stronger sales, better cost control and smoother operations, UBS said.
"Chipotle remains on track for steady transaction growth and mid-single-digit same-store sales over the long term" with margin gains and new store openings possibly supporting 20% earnings growth, the report said.
The company's Q2 results are scheduled for Wednesday.
UBS raised its price target on Chipotle stock to $65 from $60 and kept its buy rating.
Chipotle shares rose 0.2% in recent Thursday trading.
Price: 53.65, Change: +0.27, Percent Change: +0.52
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.