Stephens analyst Joshua Long reiterated an Overweight rating on Chipotle Mexican Grill, Inc.
Per the analyst, same-store sales trends through November are relatively steady in the +MSD%+ range, with traffic that appears to have strengthened further through December as comparisons ease.
Long sees continued strength from the company's Carne Asada promotion, growing engagement within the digital channel, and continued progress at the store level from the perspective of operations and optimizing throughput at peak periods.
The analyst raised 4Q23 domestic same-store sales estimate to +7.5%, which is now a touch ahead of the prior consensus expectation of +7% at the median.
According to Long, Chipotle's focus on delivering high-quality food with speed and consistency resonates with consumers and yields sales momentum.
Chipotle shared during its recently reported 3Q period that commodity and labor inflation had settled in around a relatively normal 3%-4%, the analyst notes.
Through December, food costs continue to stabilize across key input categories, which help to offset continued pressure on beef prices.
On the labor side, the environment remains challenging; however, there is a relative improvement in staffing (overall), training, and engagement levels for Chipotle, which is a net positive and a potential supporter of further share gains heading into 2024.
For 4Q23, the EPS estimate moves higher to $9.24 (vs. $8.87 prior), driven by now higher comparable sales estimate of +7.5% (vs. +5.5% prior).
In FY24, the analyst's estimates now reflect estimated comparable sales of +6.0% (vs. +5.0% prior) along with modest revisions to store-level margins and middle of the P&L estimates, with higher EPS estimate of $55.15 (vs. $53.00 prior).
Price Action: CMG shares are trading lower by 1.87% to $2,244.11 on the last check Tuesday.
