Oppenheimer's Bittner Downgrades Chipotle, Sees Downside To $400-$450

• Chipotle Mexican Grill, Inc. CMG shares are down 36 percent in the last three months.
• Oppenheimer's Brian Bittner downgraded the rating for the company to Perform.
• Many more downward revisions in estimates could be forthcoming, Bittner stated.

“CMG’s multiple is at 32x P/E – our work suggests there’s a lot more cuts to estimates coming,” Bittner wrote. He sees downside to the $400-$450 range. It may be a good idea to short Chipotle, since the company is likely to preannounce.

There is significant lack of visibility into Chipotle’s earnings in 2016. Bittner pointed out that the Street appears too optimistic in their sales and margin expectations. The analyst expects a recovery in Chipotle’s business, albeit from a much lower base than the Street. He believes there is significant downside to the Street estimates.

Chipotle’s downfall would be a gain for Jack in the Box Inc. JACK, and make it more interesting in the markets it shares with Chipotle.