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Shares of Chipotle Mexican Grill (CMG, Financials) rose after Morgan Stanley upgraded the stock to overweight from equal weight and raised its price target, signaling increased confidence in the company's long-term prospects.
Setting a new price objective of $70 per share, Morgan Stanley is predicting a stock price increase which is almost thirty percent over Friday's closing price. The investment company noted Chipotle's strong foundations and capacity to negotiate current hurdles like slow sales and deteriorating profit margins.
Analysts underlined the company's efforts in artificial intelligence and automation, which are supposed to lower prices, slow down price hikes, and maintain competitiveness. Another important benefit of Chipotle's pricing approachwhich has generally seen it increase prices more gradually than rivals while delivering bigger portionswas underlined.
Chief restaurant officer for Chipotle, Scott Boatwright, said the firm intends to cover the first expenses of additional tariffs instead of passing them on to customers. Morgan Stanley analysts think the company's technology-driven efficiency might help it to maintain a price lead over rivals in the long run, therefore supporting its value offer and ensuring consumer traffic.
This article first appeared on GuruFocus.