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Insider Trade Spotlight – Chipotle (CMG)

by | Mar 21, 2021

Chipotle (CMG) with a very rare open market buy this week from a director who bought $340,000 in stock at $1,478.60. Shares have traded about flat in 2021, up 2.5%, but up over 165% in the last twelve month. CMG is forming a small inverted head and shoulders pattern below $1,500 with the right side forming above the 50-day MA and $1,385. A breakout higher target $1,750. The $40.23B company trades 46.6X earnings, 6.75X sales, and 42.3X cash. CMG is guiding to low-double digit sales growth in both FY22 and FY23 with EPS up 30% annually. CMG has thrived over the last year given their deep roots in digital and delivery, strong loyalty program, and innovative menu changes that drove traffic. The company now expects around 50% of all sales from digital and is experimenting with digital-only promotions in 2021 including a quesadilla launch nationwide to further boost engagement.  Analysts have an average target for shares of $1535 with a Street High $2,000. William Blair positive on the quesadilla digital launch noting that assuming quesadillas achieve 20% of Chipotle’s digital mix with no improvement to traffic as a result of the launch, the move will translate into approximate 60- to 70-basis-point ticket benefit – translating to roughly 50c in EPS on an annualized basis. Baird positive on 3/8 citing its opportunity to create significant economic value by expanding its footprint both domestically and internationally. Short interest is 2.4% and its lowest level since March 2015. Hedge fund ownership fell 8.5% in Q4. Edgewood Management a buyer of a new 1.12M share position. Pershing Square still holds a 1.61M share position.

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