Chipotle takes a step closer to margin targets with rising steak prices: Truist

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Chipotle Mexican Grill Inc. CMG, + 2.81% has raised the prices of its steak and barbecue offerings according to the verifications carried out by Truist Securities analysts, and the move will bring the fast casual chain closer to achieving margin targets. Menu price checks conducted last week found a 4% price increase on items across the system.

Truist estimates that beef is included between 25% and 30% of the average chain check. “We believe the main driver of the menu price increase is the higher mix of steak sales during the pandemic, which puts pressure on margins,” analysts led by Jake Bartlett wrote in a note. “Along with the delivery menu prices, in our opinion, the increase in the steak menu prices demonstrates management’s commitment to achieving their long-term margin framework, which would result in a significant increase in estimates.” Truist rates the Chipotle stock as a purchase with a price target of $ 1,750, down from $ 1,700. See: 2020 Chipotle CEO Pays More Than Double As COVID-Related Power Supply Modifications Provided $ 23 Million Boost Plus: Chipotle Invests In Driverless Delivery Company Nuro Beef Is An Item All the rage on the Chipotle menu. The carne asada was a hit after its introduction for a limited time, adding 150 basis points to the average check. In September 2020, Chipotle brought back the roast beef after finding a supply that meets the company’s standards. At the time, Chipotle said it was looking for ways to make the item a permanent part of the menu. Last month, Chipotle launched quesadillas and a partnership with elf Beauty Inc. ELF, + 1.54% that brought Chipotle food-inspired items, such as an Extra Guac facial sponge set, to beauty customers. Read: Wingstop gave investors a sneak peek at Q1 results and may have set the bar too high Stifel analysts have named Chipotle one of their favorites in the post-COVID period, along with Wingstop Inc. WING , + 2.28% and Papa John’s International Inc. PZZA, + 1.98%, calling the three “growth stocks.” “We believe the time to build positions in growth stocks is during periods when others are concerned about transitory issues, such as difficult comparisons,” the analysts wrote. “Initiatives that have many of these concepts in place should ultimately lead to a high level of sales retention in 2021, clearing the way for investors to focus on longer-term growth prospects and leading to improved sales. confidence in the second half of the year “. Stifel is confident in Chipotle initiatives, including menu innovation, going forward. Stifel rates the purchase of Chipotle stock with a price target of $ 1,550. Chipotle shares have more than doubled, 116.6% more than last year. The benchmark S&P 500 SPX index, + 0.05% is up 53.1% over the period.