Wall Street is fawning over Chipotle's new CEO -- but he's got his work cut out for him




Shares of Chipotle Mexican Grill got a 14% bump Wednesday after the company announced Taco Bell CEO Brian Niccol would take over the helm of the embattled chain next month.

The massive pop wasn’t enough to turn Chipotle green for the year, month or even week. It’s still down 3.7% in the past seven days.

Still, Wall Street appears to have plenty of faith in Steve Ells’ 43-year-old replacement.

“Niccol brings a keen marketing sense and expertise in creating brand value and affinity, as well as proven leadership capabilities needed to run a large limited service chain,” Bernstein analyst Sara Senatore said in a note to clients Wednesday.

“Following an unfounded lawsuit that sharply slowed Taco Bell’s momentum in 2011, Niccol was a key player in first stabilizing the brand and then reaccelerating growth,” Senatore said. “He spearheaded development of the brand’s innovative digital strategy and disruptive marketing content that led to high customer engagement. He also led the acceleration of Taco Bell’s expansion plans overseas.”

Bernstein is one of the most bullish firms on Chipotle, with a target price of $US500 – almost double the stock’s price of $US287 Wednesday.

Goldman Sachs echoed Bernstein’s optimism, saying Niccol was a “grande choice,” in an attempt at research analyst humour. The bank has a $US312 price target for Chipotle.

“Against still challenged sales and margins, and concerns that CMG would struggle to attract top talent to its CEO search, naming Brian Niccol should come as a relief and could be a possible future catalyst for the shares,” analyst John Glass said.

“We think Niccol, who has been at Taco Bell seven or so years and led the brand for the last three, brings needed marketing, menu and digital savvy, as well as his own experience navigating food quality issues.”

On the whole, analysts polled by Bloomberg think shares of Chipotle could reach $US301 in the next year, 4% above Wednesday’s prices.

That’s well above the chain’s lows, hit during a span of food borne illness outbreaks in several states across the US, but still a far cry from it’s all-time highs.

In 2015, the stock was trading above $US750, well above double its current prices.

“At Chipotle’s core is delicious food, which I will look to pair up with consistently great customer experiences,” incoming CEO Niccol said in a press release. “I will also focus on dialling up Chipotle’s cultural relevance through innovation in menu and digital communications. This will attract customers, return the brand to growth, deliver value for shareholders and create opportunities for employees.”

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