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Pro Analysis

Sell Chipotle on slowing sales due to rising competition, top analyst says

Chipotle
Daniel Acker | Bloomberg | Getty Images
Chipotle

Guggenheim lowered its rating for Chipotle Mexican Grill to sell from neutral due to overly optimistic expectations and market saturation of its restaurant concept.

"We see greater downside risk to shares given an optimistic outlook requiring a steep sales recovery and earnings improvement already assumed in current expectations," Guggenheim analyst Matthew Difrisco wrote in a note to clients Thursday.

"We now see increased valuation risk from multiple contraction as we anticipate domestic new store openings will gradually slow, reflecting Chipotle's national scale and premium positioning."

Difrisco's picks have a 30 percent one-year average return and a 88 percent success rate for a profit, according to analyst ranking service TipRanks. That places him in the top 1 percent of all Wall Street analysts covering any industry.