On Tuesday, shares of struggling burrito chain Chipotle Mexican Grill CMG are down 3.50% in late morning trading after Wedbush Securities downgraded the company to "Underperform" from "Neutral," and cut its price target from $450 to $400 a share.
Analyst Nick Setyan said that Chipotle's current valuation is "overly optimistic," and n oted that a sales recovery by 2018 is a "best case scenario" for the burrito chain.
"While we remain skeptical, other material transaction drivers will emerge in the near term, and question the sustainability of a transaction recovery absent couponing and giveaways, we model transactions turning positive by fourth quarter fiscal 2016," the firm added.
Chipotle has been trying to better its reputation after an E. coli and norovirus outbreak was linked to many of its restaurants. It shares have fallen more than 27% over the past 12 months as a result.
CMG currently holds a #5 (Strong Sell) on the Zacks Rank.