Can Wall Street's appetite for Chipotle hold strong?
That question was key heading into the fast-casual restaurant operator's third-quarter earnings report, out Wednesday after the bell. Chipotle's stock fell 6% after hours in response to the results despite a top- and bottom-line beat as delivery growth kept a lid on profits.
The shares closed more than 1% higher at $1,366.66 ahead of the release, adding to their 62% gain for the year.
The stock's action on Wednesday brought it within 1.5% of its all-time high from early September.
"The big question is can they sustain this massive growth?" Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, told CNBC's "Trading Nation" on Wednesday.
Applauding Chipotle's ability to scale its delivery business during the coronavirus pandemic, Bapis listed several other factors working in the company's favor including its customer loyalty program.
"They were also able to create a real loyal culture within their employee base," he said. "They've created a culture there where you can grow as an employee. And finally, they're able to sustain earnings growth. I think it may be reasonably valued at this point right here in the short term, but long term, there's a lot of room for them to grow, especially the way they're scaling."
Plus, if consumers maintain their health-consciousness, Chipotle "fit[s] right into that picture," Bapis said.
"As I said, it's maybe reasonably valued now, but long term, we're looking for this company to continue to rise and to continue to have tremendous earnings growth over the next 24 months," he said.
TradingAnalysis.com founder Todd Gordon was also looking for more upside.
"It's kind of reinvented itself after that 2016 E. Coli scandal," he said in the same "Trading Nation" interview.
"The chart is in a powerful uptrend, but if you use a parallel channel of resistance on [a] log scale [chart], it's not actually yet overbought" and won't be until it breaks above at least $2,000 a share, Gordon added.
"They did bring in a new CEO, Brian Niccol, in '18 to recover from that scandal," he said. "They've refocused their marketing to figure out how to win that customer loyalty back. They've been focusing on the digital growth, creating those sticky customers, plus they have a nice partnership with GrubHub which should drive sales."
While Gordon acknowledged that Chipotle's margins in Wednesday's earnings report could be "questionable given the impact of Covid," they would also be "transitory," he said.
"We continue to be bullish," he said.