NEW YORK (TheStreet) -- Chipotle Mexican Grill (CMG) - Get Report shares are under pressure, down 3.36% to $459.36 Tuesday afternoon, after Wedbush Securities issued a bearish note earlier today, downgrading the burrito chain to "underperform" from "neutral" and slashing its price target to $400 from $450.
Even though the company's executives are aggressively working to win customers back following several E.coli and norovirus outbreaks linked to its restaurants, analysts believe profits will not return to pre-outbreak levels.
Labor and other operating expenses may likely erode margins, they added.
The firm's best-case scenario also appears to be grim, as sales are not likely to rebound until 2018. In order for this to happen a continuously accelerating three-year transaction growth trajectory is necessary, according to the note.
So far, shares have slumped more than 30% since the E.coli outbreaks.
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' author.
You can view the full analysis from the report here: CMG