Deutsche Bank Lays Out The Bull And Bear Cases In Chipotle

In a new report, Deutsche Bank analyst Karen Short discussed the outlook for Chipotle Mexican Grill, Inc. CMG following the company's bizarre E. coli-related drama in recent months. The sharp drop in share price has created an opportunity for both Chipotle bulls and bears alike.

Chipotle bulls like the strength of the brand, the growth opportunities for the company and the solid unit economics that Chipotle displays and believe that the company can return to its “glory days” EPS in the $17-18 range in 2017 after the E. coli scare blows over.

Related Link: Will Chipotle's Rebound Continue?

Chipotle bears, on the other hand, raise concerns over the potential for permanent customer loss, infrastructure expense and margin contraction. In addition, bears argue that same store sales had begun to contract even before the outbreak occurred.

For now, Deutsche Bank maintains a cautious outlook for Chipotle.

“Despite management's confidence in its recovery, we remain more skeptical on what a 'recovered' CMG will look like, so [we] remain at Hold with a $400 price target,” Short concluded.

Disclosure: the author holds no position in the stocks mentioned.