This fast food stock could be good for your health
Of course, Morgan Stanley is talking about the restaurants' stocks, not their food. The analysts at the investment bank upgraded Chipotle to "overweight" while downgraded Panera to "equal weight". This comes after the researchers conducted extensive customer surveys of 1,500 restaurant consumers.
Morgan Stanley analysts John Glass and Jake Bartlett say that Panera "appears to be losing ground to peers on perceived value" based on what the customer surveys show. The survey found that a third of Panera's customers find its menu prices to be high. According to the analysts, that will lead to fewer visits to Panera stores. That doesn't mean the situation at Panera is awful; it's still a strong brand, they say. "We acknowledge that while the brand scores exceptionally high on a number of key brand attributes," write Glass and Bartlett, "value is a key shortcoming and may limit SSS [same store sales] growth moving forward."
Chipotle, on the other hand, dominated the survey. The survey found the burrito restaurant chain to score "best in class on perceived value vs. a peer group of 14 fast casuals," say Morgan Stanley. "This is notable in that it is opposite of what investors' often perceived to be the case." Because they found that Chipotle food was priced 5% below its competitors on entrees, the analysts believe the company will have some room to raise prices – and thus, revenue – in the near future.
(Read: Midday Glance: Restaurant companies)
So, are the Morgan Stanley analysts right in choosing Chipotle over Panera?
To answer that question, we ask CNBC contributor Gina Sanchez, founder of Chatinco Global and advisor of $58 billion in asset allocation program assets, to look at the fundamentals of the two companies and give her pick. On the charts is Talking Numbers contributor, Richard Ross, Global Technical Strategist at Auerbach Grayson. He the charts aren't entirely on board with what Morgan Stanley says.
Which is the better buy? Watch the video above to see Sanchez and Ross analyze Chipotle and Panera.