MENU PRICE HIKES: Raymond James analyst Brian Vaccaro upgraded Chipotle (CMG) to Strong Buy from Outperform with an unchanged price target of $1,800. The recently announced menu price increases of 4% in recent weeks with more coming in the fall create “significant upside” to second half of 2021 consensus comp expectations, Vaccaro told investors in a research note. The analyst now has increased confidence in his 2022 earnings per share estimate of $35.47, which is above the consensus estimate of $32.50. Chipotle still has a has a “very strong value proposition” with its chicken burrito remaining below $8 in many markets, said Vaccaro, who argues the price increases to cover higher wages will result in limited customer resistance.
BUY WENDY’S: Northcoast analyst Jim Sanderson upgraded Wendy’s (WEN) to Buy from Neutral with a $30 price target, reversing the analyst’s downgrade to Hold on June 9. The analyst pointed out that stock declined last week despite no change to the company’s fundamentals. Channel checks are “just as compelling as ever” and indicate that Wendy’s current performance is exceeding expectations, he contended. Sanderson believes that even as Wendy’s laps the most volatile same-store sales quarter from last year’s shut-down, its average weekly sales are “as high as ever.”
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