Chipotle Mexican Grill (CMG) stock is sinking in Tuesday's trading after the quick-service restaurant chain announced CEO Brian Niccol is leaving the company, effective August 31, after he accepted a role as chief executive officer at Starbucks (SBUX).
"I'm incredibly proud of the work that has been accomplished since I joined Chipotle in 2018," Niccol said in a statement. "The strategic priorities this team has put in place have positioned Chipotle to win today and enable future growth. It's hard to leave such a great company and all of the talented people I've had the pleasure to work with, but I depart knowing the business is in great shape and poised for growth with a strong, experienced leadership team."
During his tenure at Chipotle, which began in March 2018, Chipotle's share price grew roughly sevenfold.
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Chipotle has named Scott Boatwright as interim CEO. Boatwright joined the burrito chain in 2017 and currently serves as its chief operating officer.
"I have the utmost confidence in our five key strategies and I'm excited for the new opportunity to lead the business moving forward," Boatwright said. "We have a world-class organization full of talented leaders who are passionate about our brand and purpose and excited for the long-term opportunity to grow to 7,000 restaurants in North America and expand internationally."
Is Chipotle stock a buy, sell or hold?
Chipotle's performance on the price charts under Niccol's tenure has made it one of the best stocks to buy in recent years. However, shares have struggled since the company underwent a 50-to-1 stock split in June, down more than 20%.
Still, Wall Street is bullish on the consumer discretionary stock. According to S&P Global Market Intelligence, the average analyst target price for CMG stock is $63.03, representing implied upside of 24% to current levels. Meanwhile, the consensus recommendation is Buy.
Financial services firm Argus Research is one of those with a Buy rating on CMG stock and a $60 price target.
"We believe that Chipotle has a strong balance sheet (approximately $807 million in cash and cash equivalents at the end of Q2) along with solid mobile ordering and delivery platforms," said Argus analyst John Staszak in a July 25 note. "While some consumers might be deterred by Chipotle's relatively high prices, we anticipate the company will gain market share compared to more expensive full-service restaurants."
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