Chipotle Sees Bigger Unit Growth Opportunity in North America, Continued Pricing Power
publication date: Feb 10, 2022
Image: Chipotle’s shares look like they are poised to breakout of a downtrend on news that its long-term unit restaurant opportunity is bigger than expected and that its pricing power remains intact.
Chipotle's fast-casual focus and premium food offerings coupled with its Chipotlane rollouts and its breakfast “call option” are a few things that give the company a runway for continued strength that may be unprecedented by an established brand, particularly as it sees an even greater opportunity for unit development in North America than it did before. Because it serves a higher-end fast-casual customer, we think product pricing ahead of inflation won’t be an issue (helping to augment margins), and we’re reiterating our fair value estimate of ~$1,640 per share, above where shares are currently trading at the time of this writing (~$1,580 per share). A more optimistic take on Chipotle could see shares reach the higher end of our fair value estimate range of ~$1,970 per share.
This page is available to subscribers only. To gain access to members only content (including this research piece), click here to subscribe. With a subscription, you'll have access to all of our premium commentary, equity reports, dividend reports and Best Ideas Newsletter and Dividend Growth Newsletter, as well as receive discounts on all of our modeling tools and products. Financial advisers and institutional investors have even more to choose from!