Chipotle Mexican Grill (CMG) stands to benefit from the recent launch of Chipotle honey chicken limited-time offers and lower cost of equipment upgrades, said RBC Capital Markets analysts in a Monday note.
The analysts said its field checks across 43 stores revealed that 75% believe that Chipotle honey chicken positively impacts store traffic, while 42% think the new item on the menu is more popular than al pastor.
The company now expects new equipment retrofits to be less expensive than initial forecasts, the analysts added. In conversation with the firm's investor relations, the brokerage found that the company's automated digital make line is intended to fit into the current DML footprint and shouldn't need store layout modifications.
The analysts believe incremental margins can improve materially from the current 40%. They said that "the company has a large opportunity to improve store operations through throughput efficiencies, which we believe can capture more demand over time."
RBC reiterated its outperform rating on the stock and maintained its 12-month stock price target of $70 per share.
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
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