NEW YORK (TheStreet) -- Chipotle Mexican Grill (CMG) - Get Chipotle Mexican Grill, Inc. Report shares are slumping 1.98% to $515.50 in Tuesday's pre-market trading session after Deutsche Bank downgraded the burrito chain earlier today to "sell" from "hold" and left its price target unchanged at $400.
For several months, Chipotle has been under scrutiny over outbreaks of foodborne illness linked to its restaurants, rattling investors.
"We believe little has changed at Chipotle over the last few months" since the Centers for Disease Control and Prevention (CDC) said in early February that the E. coli outbreaks linked to the company's restaurants "appear to be over."
Even though the stock has been improving since then, and management has been working to put in place new food safety procedures, analysts are questioning the company's recovery.
One of the uncertainties is how well customers will receive Chipotle's new marketing and compensation programs in an effort to regain consistency and trust.
The firm is also concerned that the loss of some customers may be permanent.
Separately, TheStreet Ratings currently has a "Hold" rating on the stock with a letter grade of C+.
The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: CMG