- Chipotle founder and CEO Steve Ells said on Wednesday he would step down and the chain would look for a new boss.
- Shares popped 7% in trading Wednesday.
Shares of Chipotle Mexican Grill spiked as much as 7.4% Wednesday morning after the fast-casual burrito chain said founder and CEO Steve Ells would step down and be replaced by a new boss.
Investors were pleased by the news, and the stock responded by spiking to $US305 in trading Wednesday morning, before settling near $US294. The gains are still a far cry from the 52-week high of $US504.73 set in May before a second string of sickness outbreaks once again slashed the company’s market value.
Shares of the company are down more than 60% since peaking in August 2015.
“I am incredibly proud of Chipotle and our people – and grateful to our loyal customers – and while we are continuing to make progress, it is clear that we need to move faster to make improvements,” Ells said in a statement on Wednesday.
“Bringing in a new CEO is the right thing to do for all our stakeholders. It will allow me to focus on my strengths, which include bringing innovation to the way we source and prepare our food. It will ultimately improve our ability to provide our guests with delicious food that is prepared with high quality ingredients that are raised responsibly and served in a way that is accessible to everyone.”
This is the second time in less than a year that Chipotle has announced plans to cut a CEO, Business Insider’s Kate Taylor reports. In December 2016, co-CEO Monty Moran stepped down from his position, with Ells saying that Chipotle’s operations had become “over-complicated” under their shared leadership.
Wall Street analysts are largely bullish on the stock, with an average price target of $US316.96 for the stock, according to Bloomberg – 8% above where shares were trading Wednesday morning.
One analyst’s price target, from Bernstein’s Sara Senatore, blew all the others out of the water. She says the stock could reach $US564 – miles ahead of even the most bullish analysts surveyed by Bloomberg.
“Even in the absence of a topline turnaround, we think there are substantial opportunities for margin expansion. Based on historical and peer benchmarking, CMG is under-earning,” Senatore said in a note Wednesday.
“An historical absence of leverage on strong comps, combined with long term underinvestment in back of the house technology, are clear signs in our view that the company should be earning more, with margins at least as high as those of lower volume peers.”
The stock is down 21.14% so far this year.
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