Shares of Chipotle Mexican Grill continued to rally on Wednesday, just one day after the company announced it was poaching Taco Bell CEO Brian Niccol to take the mantle as its new chief executive.
The burrito chain’s stock spiked more than 14 percent, up more than $36 per share, just shy of its best daily performance since Oct. 18, 2013 when it gained 16.1 percent.
Investors praised Chipotle’s hire, suggesting that the addition of Niccols could be the move that finally initiates a solid turnaround for the company. Chipotle has struggled of late to win customers back after a number of food-safety issues trampled traffic and sales.
While menu price increases helped Chipotle in the fourth quarter, the company expects traffic to continue to lag during through the middle of the year.
As impressive as Chipotle’s gains on Wednesday are, the burrito chain is not out of the woods. The company is still 17 percent off its Jan. 19 high of $345.88 and lags 42.4 percent off its 52-week high of $499.
In fact, Chipotle remains more than 66 percent off its all-time high of $758.49, which it posted on Aug. 5, 2015, just ahead of the reports about its first string of food-safety issues.
Investors are hoping that Niccol can improve Chipotle’s image and develop digital, delivery and marketing innovations at its restaurants, though it could be a tall ask.
“We believe the appointment of Brian Niccol as CEO is a step in the right direction for Chipotle, though we don’t expect his hiring will result in any material change in fundamentals until at least 2019,” BTIG analyst Peter Saleh wrote in a research note Wednesday.
Guggenheim analyst Matthew Difrisco maintained his sell rating on the stock Wednesday, writing in a note to analysts that he doesn’t foresee Chipotle turning a “180” on its current plans.
Still, if Niccol’s track record is any indicator of success, Chipotle could find itself back at the top of the pack under his leadership.