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Why Did Chipotle (CMG) Stock Gain Today?

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Shares of Chipotle (CMG - Free Report) continued their strong run of momentum, adding another 2.6% on Tuesday as investors reacted to stronger market conditions and bullish company-specific analyst reports. The fast-casual Mexican chain has now gained more than 29% in the past two weeks.

Tuesday’s continued momentum comes just one day after Chipotle surged more than 6.5% on the back of an optimistic note from the folks at BTIG. The analyst team there, led by Peter Saleh and Ben Parente, labeled Chipotle as one of their top restaurant picks, citing catalysts such as “menu innovation, digital sales growth, loyalty, menu pricing and improving new unit economics.”

An example of Chipotle’s latest efforts to attract customers is its new “lifestyle bowls.” This menu offering is designed to appeal to those with specific diet plans, including paleo, keto, and Whole30. The launch was timed perfectly, as it is still the early days of New Year’s resolution season.

BTIG’s bullishness was matched by another analyst report from KeyBanc, which raised its price target for Chipotle shares to $525 from $500. This call represents a 21% premium to Chipotle’s Friday close.

Analysts at KeyBanc noted that they believe Chipotle’s quarterly same-store sales results likely improved from the 4% growth witnessed in the October quarter. The firm also suggested that its expectations for 2019 and 2020 same-store sales could end up looking muted if new CEO Brian Niccol can successfully deploy new strategies.

Chipotle shares are up more than 90% since the day before Niccol was announced as CEO and 51% since the former Taco Bell executive actually joined the company.

"At Chipotle's core is delicious food, which I will look to pair up with consistently great customer experiences,” Niccol said when he joined Chipotle. “I will also focus on dialing up Chipotle's cultural relevance through innovation in menu and digital communications.”

Niccol was credited with leading Taco Bell’s social media push as well as its mobile ordering and payments initiatives. Soon after taking over at Chipotle, he recruited former Taco Bell marketing guru Chris Brandt, who helped the fast-food behemoth earn its reputation for zany dishes, out-of-the-box advertising, and low-budget food.

Investors and analysts know that the full Taco Bell experience would never work at Chipotle, but it looks like the new batch of executives are at least on the right track in terms of reimagining what the brand is capable of.

KeyBanc’s report noted that Chipotle could pre-report some of its earnings results at a conference next week, so investors should keep an eye on that for the next stock-moving headline.

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