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How Much Upside Could Be Left in Chipotle’s Stock Price

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Mar. 22 2018, Published 2:17 p.m. ET

Stock performance

After Chipotle Mexican Grill (CMG) posted its 4Q17 results on February 6, 2018, its stock fell $250.63 on February 13, 2018. Although Chipotle’s 4Q17 earnings were better than analysts’ expectations, its stock fell due to management’s weak outlook.

On February 13, 2018, Chipotle announced that Brian Niccol would replace Steve Ells, the founder of Chipotle, as its CEO from March 5, 2018. Niccol was the CEO of Yum! Brands’ (YUM) Taco Bell, where he was instrumental in launching the chain’s breakfast offerings and implementing mobile ordering and payment in 7,000 US restaurants.

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On March 20, 2018, the company also announced that Chris Brandt, who most recently served as the chief brand officer at Bloomin’ Brands (BLMN), will join the company as its new chief marketing officer from April 2, 2018. Earlier, Brandt worked with Brian Niccol at Taco Bell, where he led the chain’s marketing efforts.

These announcements appear to have increased investors’ confidence, boosting the company’s stock price. By the end of March 21, 2018, Chipotle Mexican Grill (CMG) was trading at $334.52, which represents a rise of 33.1% from its low on February 13, 2018.

Year-to-date performance

Last year was a tough one for Chipotle, with its stock price falling 23.4%. However, since the beginning 2018, its stock has risen 15.7%. In comparison, Shake Shack (SHAK) and The Cheesecake Factory (CAKE) have fallen 4.0% and 0.5%, year-to-date, respectively. The broader comparative S&P 500 (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have risen 1.9 and 6.1%.

Series overview

In this series, we’ll look at analysts’ revenue and earnings expectations for Chipotle in 2018, and management’s guidance. We’ll end this series by looking at the company’s valuation multiples and analysts’ recommendations. In the next part, we’ll look at analysts’ revenue expectations for 2018.

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