Raymond James analyst Brian Vaccaro upgraded Chipotle’s stock (ticker: CMG) on Monday to Strong Buy from Outperform. The price increases will be met with minimal customer resistance, Vaccaro said in a note. Chipotle has a strong value proposition; for instance, the chicken burrito is still below $8 in many cities, he said.
Vaccaro maintained a target price of $1,800. The stock was down 1.4% in recent trading on Tuesday to $1,371.82. Shares are down 0.8% so far this year compared with a 13.1% rise in the S&P 500. Chipotle stock is up 33.3% in the past 12 months.
The analyst also raised the second-quarter earnings per share estimate by 10 cents to $6.73, reflecting anticipated increases in average weekly sales estimates as dine-in traffic returns and digital sales remain strong.
The fast-casual chain announced that it would increase menu prices across the board by around 4% following a raise to a $15 average hourly wage in the midst of hiring struggles. The increases are indicative of a larger trend in the markets, where many are wary of wage inflation and as inflation fears build.
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