Chipotle shares will surge because the restaurant chain's new management will spur a turnaround, according to one Wall Street firm.
Baird raised its rating to outperform from neutral for Chipotle shares, citing the new CEO's impressive resume.
"We think the appointment of Brian Niccol as CEO (starting March 5) marks an important inflection point, as we are confident that his skills sets are well suited to lead a return to better top and bottom-line momentum over the next 12-24 months," analyst David Tarantino wrote in a note to clients Tuesday. "We view Niccol as an extremely talented leader whose expertise in brand management brings a valuable skill set that is complementary to the existing team. We know Niccol quite well, and we have been impressed with his track record of success in driving good sales performance during his past leadership roles."
Chipotle shares rose 15 percent the day after the company announced it was tapping Niccol as its new chief executive on Feb. 13.
The company's stock was up 5 percent Tuesday morning, trading above $328 a share.
Tarantino raised his price target to $400 from $315 for Chipotle shares, representing 28 percent upside from Monday's close.
"We are optimistic that his impact in leading the charge at Chipotle can be similarly successful," he wrote.
Despite the recent rally the company's stock has significantly underperformed the market during the past year. It is down 26 percent in the past 12 months through Monday compared with the S&P 500's 17 percent gain.