Chipotle Mexican Grill (CMG) sales are expected to accelerate in H2, supporting upside potential for the stock after a soft H1 largely due to macroeconomic pressures and tough annual comparisons, UBS Securities said Thursday in a report.

New menu items, better marketing and improved service speed may underpin a pickup in customer traffic and sales, UBS said.

While Q2 margins may have been squeezed by slower sales and higher marketing costs, profitability is expected to bounce back in H2 thanks to stronger sales, better cost control and smoother operations, UBS said.

"Chipotle remains on track for steady transaction growth and mid-single-digit same-store sales over the long term" with margin gains and new store openings possibly supporting 20% earnings growth, the report said.

The company's Q2 results are scheduled for Wednesday.

UBS raised its price target on Chipotle stock to $65 from $60 and kept its buy rating.

Chipotle shares rose 0.2% in recent Thursday trading.

Price: 53.65, Change: +0.27, Percent Change: +0.52