Chipotle Mexican Grill (CMG) is poised for sustained transaction growth amid operational improvements at the restaurant chain, RBC Capital Markets said in a note Friday.

The firm is assuming coverage of the stock with an outperform rating and $70 price target.

"CMG is a top-tier operator in the fast-casual space with a long runway for unit growth and multiple potential upside catalysts which more than justify its premium valuation," the firm said.

RBC said the company's investments in equipment and store operations automation initiative should help speed up service thereby boosting traffic.

"As the company invests in throughput driving faster speed of service, this should allow for more transactions per employee hour relative to current levels," the firm said. '"Incremental margins should expand as employee productivity improves."

RBC also sees potential further upside from international expansion opportunities for the company.

Price: 58.85, Change: -1.06, Percent Change: -1.77