Deutsche Bank: Shares of Chipotle Will Fall 24 Percent Over the Next Year

The worst isn't over.

Chipotle: The Complete History in About Three Minutes

While shares of Chipotle Mexican Grill Inc. have recovered a bit after bottoming under $400 in January—after tumbling from an all-time high of $758 reached just five months earlier—analysts at Deutsche Bank AG say investors shouldn't expect the stock to make new highs in the near future.

In fact, they're downgrading the stock to "sell" status while maintaining a 12-month price target of $400, in effect forecasting that shares will fall a further 24 percent from the current level. 

The once-high-flying stock was sent tumbling late last year, following an E. coli outbreak. Analysts got a look at how the outbreak affected sales earlier this month, and while the numbers weren't pretty, a number of them upgraded the stock on hopes that the issue would soon be resolved and customers would be loyal enough to return to the Mexican food chain. 

Deutsche Bank's Karen Short and her team have a different view. They believe that, like a finished tortilla, much of the recovery is already baked into Chipotle shares, and they have therefore decided to downgrade the stock.

"We question why Chipotle of today should be valued like Chipotle of yesterday," the team wrote in a note to investors. "We still question what a recovery will look like (and when it will materialize). While management has been proactive—putting in place new food safety prep and procedures (in its supply chain and unit-level), and new marketing and compensation programs to regain consistency and customer trust, there is tremendous uncertainty on how well they will be received."

A recent survey commissioned by analysts at Bank of America Corp. showed Chipotle's customers in a potentially forgiving mood, with 56 percent of respondents saying their perceptions of the company have remained the same over the past few months vs. 37 percent who said they had acquired a worse view of the company. Some 10 percent of respondents said they had no plans to return to the restaurant.

Still, it appears Deutsche Bank is taking the margarita glass half-empty view when it comes to the "Chipotle of today," compared to the one of yesteryear.

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