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Chipotle Mexican Grill Could Expand Margins as Soon as Q4, RBC Says

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Chipotle Mexican Grill (CMG) could expand restaurant-level margins as soon as Q4 amid improving growth drivers, RBC Capital Markets said in a Thursday note.

The company's Q2 adjusted earnings and revenue topped analysts' expectations, as did same-store sales of 2.2%, and management raised full-year guidance, the investment firm said.

According to RBC, the raised guidance is still relatively conservative as the midpoint implies no acceleration from Q3 to Q4. But improving underlying comps, and stabilizing inflation are likely to accelerate margin expansion to Q4, the investment firm added.

Other catalysts include deployment of new equipment packages, the new digital make line interface, and the planned national launch of catering services in 2027, according to the note.

RBC maintained an outperform rating and $45 price target on Chipotle Mexican Grill.

Shares of the company were up more than 12% in Thursday trading.

Price: $38.47, Change: $+4.23, Percent Change: +12.34%

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