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Credit Suisse goes big on restaurant stocks, including Chipotle

Credit Suisse analyst Lauren Silberman initiated coverage on nearly a dozen restaurant stocks on Tuesday with Outperform ratings on more than half, including Chipotle Mexican Grill (CMG).

Silberman gave an $870 price target on the stock, citing the company’s ability to shift its narrative to one of growth rather than recovery.

The new Chipotle Nachos dish is seen on display with other new dishes at the Chipotle Next Kitchen in Manhattan, New York, U.S., June 28, 2018. REUTERS/Shannon Stapleton

The company has made a serious effort to transform its image after a series of foodborne illness outbreaks at its various stores, dating back to late 2015. The outbreaks affected hundreds and spanned across several states. The company announced back in April that it received another subpoena from U.S. federal prosecutors, related to an outbreak that left customers sick in 2018 in an Ohio restaurant.

Digital and delivery

Silberman also said that Chipotle’s trend initiatives, like the shift to digital and delivery, positions the company well to appeal to its base and outperform peers.

“Chipotle is the only large restaurant company to integrate delivery in its app,” Silberman said.

“Chipotle has doubled its digital utilization in just two years, with mobile order & pay and delivery now representing 15% of sales,” Silberman said. “Operations are well suited for an omni-channel strategy, with secondary production lines executing out of restaurant sales, ‘smarter pickup times’ technology for visibility into order processing and in-store pickup shelves for digital orders. ”

Dunkin Brands (DNKN) and Jack in the Box (JACK) were among the firm’s least favorite restaurants, with both companies receiving underperform ratings.

Bridgette Webb is a producer at Yahoo Finance. Follow her on Twitter @bridgetteAwebb.

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