"The sales recovery will remain more protracted than the market believes, and possibly more costly as a result, as CMG likely needs to ramp up marketing spend to lure consumers back in," Glass said in a research note.
Glass said it could take "years" for Chipotle to return to its prior peak volumes.
A survey released on Tuesday conducted by William Blair appeared to show that consumers are more willing to eat at the chain, with concerns about food safety reaching an all-time low in 2016. The firm has conducted monthly surveys of about 800 adults since November 2015, when the E. coli outbreak and food-safety concerns were impacting traffic.
About 13 percent of respondents reported being "very worried" about food safety at the Mexican chain, down from 20 percent in January, William Blair survey said.
Chipotle's battle to regain consumer confidence may not be over, however. About 45 percent of respondents said that they are eating Chipotle less often and 26 percent said that they hadn't eaten at the chain since the outbreak.
Chipotle has been investing in promotions in an attempt to woo back customers. Recently, it launched a frequency-based rewards program to drive visits.
"Our early observations 12 days into the program suggest longer lines and customer enthusiasm for the program, which points to the potential for a more material improvement in traffic trends in July and could bode well for a steeper rate of recovery in the third quarter," Sharon Zackfia, an analyst with William Blair, wrote in the research note Tuesday.
While the company has attempted to move consumer focus away from its safety protocols in favor of highlighting its fresh food and new menu items, only 16 percent of people said that new items would convince them to return to the chain, according to William Blair's survey.
"So far, Chipotle has shied away from specifically mentioning food safety in its marketing campaigns, which could represent an opportunity to accelerate the pace of the recovery based on our surveys," the report said.
Some 59 percent of respondents noted that new food safety procedures would encourage them to dine at the Mexican chain more often.
"And while comps should begin to improve in the [second half of 2016], our work has compelled us to rethink the rate of improvement and commensurate margin gains in both '16 and '17, as well as longer term," Glass said in the note.
He said that if the chain continues to struggle, and it is met with other adverse conditions such as an increase in commodity costs that can't be passed along to consumers, the "bear" case for Chipotle shares is a price target of $250.
Correction: This story was revised to correct that Morgan Stanley's previous rating of Chipotle stock had been overweight.