Analysts Say Chipotle Won’t Recover Sales Losses Until at Least 2018

Food giveaways cited as a short term, unsustainable solution

Analysts believe the company’s current valuation “reflects an overly optimistic outlook” on Chipotle’s road to recovery.

Analysts on the future of Chipotle: Good, but not great.

The company’s stock was downgraded by investment firm Wedbush Securities, which stated that — best case scenario —  the company will not recover its sales losses from the foodborne illness outbreaks until at least 2018, reports CNBC.

In a research note, Wedbush analysts write, “Based on our belief that current valuation reflects an overly optimistic outlook regarding Chipotle's path to recovery, we downgrade shares to underperform from neutral.” It cut Chipotle’s target stock price to $400 from $450 and discourages investors from owning shares in the company as “unit economics may not rebound even if sales do.”

Though the company reports that it has recovered about a third of its sales, analysts say the company’s giveaway strategy is not only unsustainable, but the company has yet to prove its ability to sustain sales without coupons.


 “We model a gradual rebound in traffic through 2016, with upped near-term marketing the lone driver to point to,” Wedbush analysts say.