Chipotle (CMG) Could Launch Quesadillas in March, Which Should Drive Sales Higher - Truist

Truist Securities analyst Jake Bartlett believes Chipotle Mexican Grill (NYSE: CMG) could launch quesadillas in early March.

The company has been testing quesadillas for a while, with pricing initially set at $0.25 (~+3%) above burritos/bowls. Bartlett expects this to be the case in the national launch.

“A March launch of quesadillas could drive upside to our roughly consensus matching 1Q21 SSS estimate of +17.0% (vs. consensus of +16.8% and guidance of mid-to-high-teens). Our calls to stores found that new quesadilla presses have been rolled out to the system, and we expect an early March launch of quesadillas.

“While the digital only offering limits the potential sales impact (49% of sales in 4Q20), the launch is well-timed as CMG seeks to sustain its digital mix as in-store dining resumes. Quesadillas have long been the most requested new menu item by consumers, suggesting a potential meaningful impact on sales, especially as CMG leverages its large 'rewards' membership base (19.5M members, up ~2x since the COVID crisis began),” the analyst wrote in a memo sent to clients.

CMG stock fell on February 03 when the company reported weaker-than-expected sales for the three months ended Dec. 31. Sales advanced 5.7% higher to miss on the analysts’ estimates of 5.9%.

Chipotle also added it opened 61 new restaurants during the quarter and it is eyeing to open a further 200 new restaurants in 2021.

Bartlett rates CMG with a “Buy” rating and a price target of $1,700.00 per share.

For an analyst ratings summary and ratings history on Chipotle Mexican Grill click here. For more ratings news on Chipotle Mexican Grill click here.

Shares of Chipotle Mexican Grill closed at $1473.09 yesterday.

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