Beleaguered burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG) is catching a lift this morning, as traders cheer reports that the company has hired Taco Bell boss Brian Niccol -- the mastermind behind the Doritos Locos Taco -- as its new CEO. Niccol is slated to replace Chipotle founder Steve Ells in the top job as of March 5.
The news has CMG trading sharply higher this morning, up 13.3% at $284.80. However, analysts aren't exactly rushing to upgrade the shares. In a note to clients, Canaccord Genuity backed its "hold" rating and $300 price target, asserting, "...we do not recommend chasing shares at current levels."
Most brokerage firms are camped on the sidelines with Canaccord, as CMG sports 19 "holds" and five "sells," compared to just three "buy" recommendations. Given the stock's drastic decline off its May 2017 peak at $499, this skeptical configuration isn't too surprising.
However, it's likely that some of the weaker bearish hands are hitting the exits today as CMG rallies. Short interest accounts for a healthy 13% of the equity's float, representing more than three times the average daily trading volume. Plus, with Chipotle stock's 14-day Relative Strength Index (RSI) settling Tuesday at a way-oversold 21, the shares may have been due for a bounce anyway.