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Why Did Chipotle Stock Price Rise ~4.0% on May 16?

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May. 17 2018, Updated 8:11 a.m. ET

Stock performance

On May 16, John Staszak of Argus upgraded Chipotle Mexican Grill (CMG) from “hold” to “buy.” He increased Chipotle’s target price to $540. Staszak is optimistic about Brian Niccol’s leadership and expects the company’s SSSG and earnings to accelerate in the coming years. The initiatives that were taken by Chipotle’s management, like implementing digital advancements, menu innovations, expanding the catering and delivery services, and various marketing and promotional offerings, are expected to drive the company’s sales.

Argus upgrading the stock appears to have increased investors’ confidence, which led to a rise in the company’s stock price. By the end of May 16, Chipotle was trading at $444.67, which represents a rise of 4.3% from the previous day’s closing price.

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Other analysts’ recommendations

Of the 32 analysts that follow Chipotle, 25.0% are favoring a “buy,” 68.8% are favoring a “hold,” and 6.3% are favoring a “sell.” On average, analysts expect Chipotle’s stock price to reach $372.5 in next 12 months, which represents a fall of 16.2% from its current stock price.

YTD stock performance

Since the beginning of the year, Chipotle’s stock price has increased 53.8%. The appointment of Brian Niccol and Chris Brandt as the company’s new CEO and chief marketing officer, respectively, and strong first-quarter earnings led to the rise in Chipotle’s stock price. To learn more, read Chipotle Stock Rose over 10% after Hours on Strong 1Q18 Earnings.

Shake Shack (SHAK) and The Cheesecake Factory (CAKE) have returned 35.7% and 9.5% YTD (year-to-date), respectively. Also, the broader comparative indices, the S&P 500 (SPY) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 1.8% and 6.7%, respectively, during the same period.

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