Chipotle's drive-through lane growth not fully appreciated: Oppenheimer

By Liz Moyer -- Chipotle Mexican Grill Inc (NYSE:CMG) is “getting spicy again,” generating growth with its Chipotlane drive-through offering, something that the market hasn’t fully appreciated, according to a note Friday by Oppenheimer.

The analysts raised their price target to $1,875 on the stock, with an outperform rating.

Chipotle shares are up 1.1% on Friday and 23% so far this year. The new price target implies nearly 10% upside from current levels.

Oppenheimer said the Chipotlanes offer a stronger return on investment. “This is not fully-reflected in investor sentiment,” they wrote.

During the company’s third quarter earnings report, Chipotle said it continued to open more locations with a Chipotlane. “These formats continue to perform very well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns,” the company said.

Oppenheimer’s investment thesis assumes same store sales are in the mid-single digits for 2023, that restaurant margins are in the mid-20% range and expand further, and that EPS is in the low- to mid-$40 range in 2023.

Chipotle is expected to report earnings on Feb. 7. Analysts expect earnings per share of $8.91 on revenue of $2.2 billion. Same store sales are expected to rise 6.9%, which would represent a slower pace than in previous quarters. Same store sales rose 7.6% in the third quarter and 10.1% in the second quarter. They rose 15.2% in the fourth quarter of 2021.

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