Chipotle Mexican Grill (CMG) should see stronger sales, customer traffic and restaurant margins in H2, helped by higher prices, new menu items, marketing, digital tools, better operations and easier comparisons, UBS said in a note Friday.

Chipotle Mexican Grill is scheduled to release its Q2 financial results on July 29.

UBS expects Q2 same-store sales growth of 1.2%, close to the 1.3% consensus estimate, as menu launches and promotions helped offset pressure on consumer spending as sales trends are expected to strengthen further in Q3 and Q4, although lower-income, younger and Hispanic customers may remain under financial pressure.

Limited-time menu items, a relaunched rewards program, catering growth and more efficient restaurant equipment could help lift customer visits and spending, UBS said, adding that it sees possible upside if same-store sales growth reaches about 2% to 3% in H2, while new restaurant openings remain in the high-single-digit range.

Q2 restaurant margins are expected to fall to 25% because of higher beef, dairy and avocado costs, but the investment firm sees margins improving later in the year as inflation slows and pricing increases.

UBS kept its buy rating and $45 price target for Chipotle Mexican Grill.

Price: 35.67, Change: +1.07, Percent Change: +3.09