Chipotle Mexican Grill (CMG) is likely to post better than expected Q2 results supported by higher demand and more favorable macro conditions, RBC Capital Markets said in a note Wednesday.

The firm said store checks across 35 locations showed improved traffic and menu mix, with limited-time offerings driving demand.

RBC raised its Q2 revenue forecast by 1.6% to $3.14 billion and now projects earnings of $0.33 per diluted share.

"Chipotle is a top-tier brand in the fast casual space with a strong execution record over the past several years. The brand is nationally recognized by consumers, and we think the demand supports a meaningfully higher store count in North America," the firm said.

RBC said the rollout of new kitchen equipment may also contribute to efficiencies and future product innovation.

RBC raised its price target on Chipotle to $65 from $60 and maintained an outperform rating.

Shares of the company were up more than 1% in recent trading Thursday.

Price: 56.59, Change: +0.65, Percent Change: +1.16