Chipotle Expands With Uber Eats in Canada; Shares Pop as Piper Sandler Raises PT

Chipotle Mexican Grill, Inc (CMG) has partnered with Uber Eats (UBER) to help make deliveries in Canada and expand its geographical reach to more regions, while growing its digital and delivery business. Shares rose 3.5% to $932.18.

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The announcement comes after the burrito chain last month said it entered into a national partnership with Uber Eats in the U.S. as stay-at-home orders tied to the coronavirus pandemic boosted demand for delivery services.

“Digital sales grew 80.8% in the first quarter of 2020 compared to the prior year, and to accommodate the increase in digital and delivery, Chipotle is installing new in-restaurant features to increase convenience for customers and delivery partners,” the company said in a statement. “Premium placement for digital built in pick-up portals allow delivery drivers to retrieve food quickly and efficiently.”

Four-star analyst Nicole Miller Regan at Piper Sandler maintained a Buy rating for Chipotle and raised the stock’s price target to $1,100 from $850, reflecting 18% upside potential from current levels. The value of the company’s shares has more than doubled in the past two months.

Regan contends that the company’s results “continue to be an excellent proxy of the power of aligning human and financial capital investments to achieve success.”

“Management is operating from a more proactive position and showing flexibility around changing consumer behaviors,” Regan wrote in a note to investors. “The digital platform may also prove powerful as a product offering tool as consumers’ expectations adjust and change based on which sales channel they tap into.”

Regan added that the burrito chain has enough available capital to “continue to make human capital, digital and unit development investments”.

Turning now to the rest of the Wall Street analyst community, the stock has a more cautiously optimistic Moderate Buy consensus, almost evenly split between 13 Buy ratings and 12 Hold ratings. While the $863.74 average analyst price target indicates 7.3% downside potential in the shares in the coming 12 months. (See Chipotle stock analysis on TipRanks).