Chipotle Mexican Grill Inc. (NYSE: CMG) has been beaten down over the past few years. As recently as 2015 this was a $700 stock, but now it’s about half that. Most of this drop was precipitated by health scares at its locations, whether it’s E. coli or norovirus, and this has reared its ugly head again in just the past month. More recently the company reported its second-quarter results, and analysts took the opportunity to weigh in on Chipotle’s health scare and its financials.

24/7 Wall St. has included some very brief highlights from Chipotle’s earnings report, and separately we have included what analysts are saying about the burrito chain in the wake of earnings and the latest norovirus revelation.

Chipotle posted $2.32 in earnings per share (EPS) and $1.17 billion in revenue. That compared with consensus estimates from Thomson Reuters of $2.18 in EPS and revenue of $1.19 billion. In the same period of last year, it posted EPS of $0.87 and $998.38 million in revenue.

During this quarter, comparable restaurant sales increased 8.1%, and the restaurant level operating margin was 18.8% in the quarter, an improvement from 15.5% in the second quarter of 2016.

Wedbush noted in its report that the current valuation appropriately reflects an improving top-line trajectory, offset by limited visibility into Chipotle’s near-term and medium-term margin trajectory. The firm maintained a Neutral rating for Chipotle but lowered its price target to $350. Wedbush had this to say:

Management commentary indicated July trends prior to the Norovirus incident last week were trending up low- to mid-single digits. After Norovirus, trends decelerated by ~5%, implying flat-to-negative SSS growth over the past few days. The Q3 consensus SSS growth expectation was 6.7%. 2017 guidance remains for high-single-digit SSS growth, with consensus currently at 9.1%. 195-210 new restaurants in 2017 also remains the target.

Jefferies believes something similar and raised Chipotle to a Hold rating from Underperform with a $350 price target. Essentially the firm believes that the current valuation and consensus now reflect the reality of Chipotle’s path to recovery. The firm detailed in its report:

On a 2-year stacked basis, same-store sales (SSS) in the first two weeks of July were trending near -17.5%, implying mid s-d or lower SSS early in 3Q, but trends fell by 5.5% following the norovirus incident in VA. We expect SSS to remain choppy and have been slower to ramp with ads less effective than desired, with Chipotle acknowledging that visibility remains low, despite maintaining its 2017 high single digit SSS guide. Traffic is likely recovering slower than expected with 2Q SSS of +8.1% below us/consensus of +12%/+9.5%, which included +5.3% traffic and +2.8% avg. check. Traffic was negatively impacted by 30-50 basis points related to cyber security issues during the quarter and Chipotle is only now moving forward with initiatives around menu innovation (queso tests) and technology enhancements. We are lowering our 3Q/2017 SSS to +5%/+8.7% from +10%/+11%, but maintain our +3% SSS for 2018.

A few other analysts weighed in on the stock as well:

• Barclays has an Equal Weight rating and cut its price target to $370 from $400.
• Cowen has a Market Perform rating and cut its price target to $370 from $440.
• Credit Suisse has a Neutral rating and raised its price target from $325 to $335.
• Maxim lowered its price target to $435 from $470.
• Mizuho reiterated a Buy rating but cut its price target from $533 to $450.
• Morgan Stanley lowered its price target to $380 from $445.
• RBC has a Sector Perform rating and cut its price target to $400 from $500.
• SunTrust Robinson Humphrey reiterated a Buy but cut its price target from $520 to $505.
• Telsey Advisory has an Outperform rating and cut its price target to $420 from $440.
• UBS cut its price target to $380 from $445.

Shares of Chipotle were last seen trading at $350.50, with a consensus analyst price target of $400.68 and a 52-week range of $336.52 to $499.00.

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