Chipotle Mexican Grill Inc.’s margins should improve in the second half of the year as the supply of avocados grows, easing the price for the key ingredient, according to a Truist Securities note. Analysts quote data from the Hass Avocado Board showing avocado shipments are expected to be up 2.1% in the third quarter after fewer shipments from Mexico in the first half. Mexico provides about 80% of supply. Avocados account for about 9% of Chipotle’s cost of goods sold (COGS). Prices were up 64% year-over-year in the first quarter and up 65% for the quarter to date. “We estimate that a 10% change in avocado prices impact restaurant margins by ~30 basis points and annual earnings per share by ~$0.65,” Truist said. Truist rates Chipotle shares buy with a $2,000 price target. Chipotle stock was up 1.3% in Wednesday premarket trading, and has fallen 31.1% for the year to date. See also: Avocado demand persists despite 44% increase in prices and sky-high grocery inflation

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