Sales momentum and a decrease in avocado prices should support bottom-line growth for Chipotle , according to Bank of America Merrill Lynch. The firm upgraded the restaurant chain to a neutral rating and raised its target on the stock by more than 40%, from $590 to $850. Analyst Gregory Francfort also raised his full-year earnings per share estimate to $13.70 from $12.70, and 2020's EPS to $17.15 from $15.50. Shares of the restaurant chain were up 2% in Friday's trading session, rising to $847. "Strong sales momentum ... and normalizing avocado prices alleviate our near-term EPS concerns," he said in a note to clients Friday, adding that CEO Brian Niccol "has made easing consumer access to CMG a central strategy focus." Francfort also cited the growth in digital, which on average leads to a higher order price than in-person ordering. Following a series of E. coli outbreaks that began in 2015, investors and customers fled the restaurant. Shares slid from more than $700 in August 2015, to $255 in February 2018. But the fast-casual chain has since cleaned up its image, and ever since Niccol took over as CEO in March 2018 the stock has been steadily rising. The stock is up 160% since Niccol's first day on March 5, 2018. Bank of America's upgrade is in some sense late. The firm downgraded the stock to an underperform rating on October 18, 2017, thereby missing out on the stock's 92% gain since. - CNBC's Michael Bloom contributed reporting.
Sales momentum and a decrease in avocado prices should support bottom-line growth for Chipotle, according to Bank of America Merrill Lynch.