It might be time to take a bite out of Chipotle (NYSE:CMG)
Charts of the fast-casual restaurant chain’s stock show Chipotle consolidating above a key area of support, and if that holds, it could be a straight shot to $1,000 per share, according to an official with commodity trading firm Blue Line Futures.
Chipotle is expected to issue its third-quarter earnings report on Tuesday, heading off one of the busiest weeks of earnings season, in which nearly half of the companies in the Dow Jones Industrial Average and a quarter of the S&P 500 will report their results.
Chipotle hit an all-time high after its second-quarter report.
A climb to $1,000 per share would represent a nearly 19% rise from Friday’s closing price of $841.48. The stock got a 1.5% boost in Friday’s trading session after Bank of America analysts upgraded the stock to neutral.
Those shares climbed $1.87 to $843.35, first thing Monday morning.
Late last week, Bank of America Merrill Lynch shifted to a Neutral position on Chipotle after having the restaurant stock slotted at Underperform.
"While we still struggle with the valuation upside, our expectations that CMG will deliver near-term EPS upside to consensus makes a correction in the multiple unlikely, driving our decision to move to Neutral," reasons the firm.
Bank of America doesn't expect a return to peak margins for Chipotle, but thinks strong comparable sales and EPS growth should support valuation.
The bank also moved to a price objective of $850 from $590 (or 50X the 2020 EPS estimate).
