Chipotle Mexican Grill, Inc. (NYSE:CMG) has kicked off the search for a new CEO to succeed Steve Ells – current chairman, CEO and the founder of the company. Chipotle shares reacted to the news, rising nearly 6% to $304.31 in pre-market trading Wednesday. CMG has a 1-year high of $499 and a 1-year low of $263. The stock’s 50-day moving average is $291.54 and its 200-day moving average is $353.97.
Ells will become executive chairman following the completion of a search to identify a new CEO. The Board has formed a search committee comprised of Directors Robin Hickenlooper and Ali Namvar, as well as Ells, to identify a new leader with demonstrated turnaround expertise to help address the challenges facing the company, improve execution, build customer trust, and drive sales.
“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,” said Ells. “Simply put, we need to execute better to ensure our future success. The Board and I are committed to bringing in an experienced leader with a passion for driving excellence across every aspect of our business, including the customer experience, operations, marketing, technology, food safety, and training.”
Added Ells, “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. I am confident that this will allow us to deliver value for our shareholders, and provide rewarding opportunities for our employees. Chipotle has vast unrealized potential. As we work hard to restore our brand, I believe we can capitalize on opportunities, including in areas such as the digital experience, menu innovation, delivery, catering, and domestic and international expansion, to deliver significant growth.”
Chipotle lead independent director Neil W. Flanzraich said, “Steve is a visionary leader and one of the most successful restaurateurs in history, having grown Chipotle from a single restaurant in Colorado to more than 2,350 restaurants today. Steve made the decision, and the Board agreed, that now is the right time to identify a new CEO who can reinvigorate the brand and help the company achieve its potential. We are committed to recruiting a world-class CEO for this incredible opportunity.”
The Board has retained the services of leading executive recruitment firm Spencer Stuart to assist in the search for a new CEO.
On the ratings front, Chipotle has been the subject of a number of recent research reports. In a report issued on October 25, Cowen analyst Andrew Charles reiterated a Sell rating on CMG, with a price target of $250, which reflects a potential downside of -13% from last closing price. Separately, on the same day, Mizuho’s Jeremy Scott reiterated a Buy rating on the stock and has a price target of $370.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Andrew Charles and Jeremy Scott have a yearly average return of 13.2% and 3% respectively. Charles has a success rate of 72% and is ranked #519 out of 4735 analysts, while Scott has a success rate of 58% and is ranked #2244.
Sentiment on the street is mostly neutral on CMG stock. Out of 25 analysts who cover the stock, 18 suggest a Hold rating , 4 suggest a Buy and 3 recommend to Sell the stock. The 12-month average price target assigned to the stock is $316.13, which represents a potential upside of 11% from where the stock is currently trading.
Chipotle Mexican engages in the development and operation of fast-casual, fresh Mexican food restaurants throughout the U.S. It offers focused menu of burritos, tacos, burrito bowls, and salads, prepared using classic cooking methods.