Chipotle Enters Into New $600M Credit Facility

Chipotle Mexican Grill, Inc (CMG) has entered into a new $600 million revolving credit facility, including a letter of credit sub-facility up to $20 million.

The senior, unsecured facility will mature on May 7, 2021 and is guaranteed by certain of the company’s material domestic subsidiaries, the filing reveals.

Borrowings under the facility will incur interest at an initial annual rate of LIBOR plus 1.50%, which is subject to adjustment based on the company’s total leverage ratio, with LIBOR being no less than 1.00%.

Chipotle will also will pay a commitment fee on undrawn amounts under the facility equal to 0.625%.

RBC Capital’s Christopher Carrill has a hold rating on CMG stock, but recently raised his price target from $727 to $783 (15% downside potential).

“We are raising our estimates for 2020 and 2021, as 1Q results suggest potential for a faster recovery to sales (and margins) than we previously contemplated” the analyst wrote following earnings. He is also encouraged by strong growth in digital utilization (deliver + order ahead) in recent weeks.

“Valuation keeps us on the sidelines despite improved visibility to sales stabilization/improvement; remain Sector Perform” Carrill told investors. Shares are trading up 11% year-to-date.

Indeed, the stock has a cautiously optimistic Moderate Buy consensus, with 12 recent buy ratings and 12 hold ratings. The average analyst price target stands at $852, 8% lower than the current share price. (See Chipotle stock analysis on TipRanks).

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