Cowen Cuts Chipotle To Sell, Consumer Perception Still Low

Shares of Chipotle Mexican Grill, Inc. CMG lost more than 2 percent early Friday morning after analysts at Cowen turned sour on the fast-casual restaurant chain.

Analysts at Cowen now rate Chipotle a Sell, with a $250 price target, CNBC's Carl Quintanilla highlighted in a tweet. The research firm cited proprietary survey data, which found that the restaurant's quality and value perceptions "plummeted" from 2015's levels when it had to deal with an E. coli outbreak. To this day, the perception remains near a trough.

"We believe weak perceptions help explain the slow sales recovery CMG has faced," the tweet quoted the analysts as saying.

Looking forward, there isn't any reason to believe consumers will more favorably view the company. This is a major concern since Chipotle's success up to 2015's E. coli outbreak was based on its perception of offering superior quality.

On top of that, the company's plan to implement a "hefty" 5-percent price increase over the next two to four quarters seems "imprudent" in the current restaurant environment, the analysts also argued. Specifically, many other fast-casual chains across different cuisines are implementing a similar "food with integrity playbook."

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