One of the market's most encouraging turnaround stories over the past year or so has been Chipotle Mexican Grill (CMG 0.30%). The one-time market darling that put fast-casual dining on the map -- only to come undone after a string of food-borne illness outbreaks -- is a rock star again. Shares of Chipotle have soared 185% since bottoming out 14 months ago. 

Chipotle stock hit a three-year high last week, but at least one bull on Wall Street is changing his tune. John Glass at Morgan Stanley downgraded the shares on Wednesday, lowering his rating from overweight to equal weight. Glass is still okay with Chipotle's fundamentals -- his downgrade is a valuation call. The analyst feels that the stock's torrid run -- it's up 64% this year alone -- has more than factored in the expected improvement in sales. 

A burrito on a plate with a side of guac and chips on the side.

Image source: Chipotle Mexican Grill.

Flipping the burrito

Glass did boost his price target on the stock from $617 to $658 -- but the new goal is 7% below where the stock trades now. In short, he thinks the shares will likely be heading lower in the near future. 

He isn't alone in his cautious stance. Short interest is well off the 3.8 million shares when bearishness peaked in May of last year, but thanks to the stock's heady rise since then, the 2.4 million shares shorted now are worth more than the sum of the bearish wagers placed 11 months ago. Put another way, there is more real money betting against Chipotle now. 

A lot of things can go wrong here. Chipotle has been more of a follower than a leader in sales-boosting trends like mobile ordering and meal delivery, but even its ballyhooed turnaround in comps is misleading. Same-restaurant sales did rise 4% in 2018, but transactions per store actually declined before turning around in the fourth quarter. Is Chipotle truly back if traffic counts continue to sit well below their 2015 peak?

Nor is Glass the only bull who has downgraded the company following the stock's hearty cardio routine. Last week, it was Andrew Barish at Jefferies shifting to a neutral position. His new $700 price target is higher than Glass', but it, too, is marginally lower than where the shares were at Tuesday's close. Barish expects that the first quarter will be solid, but he foresees that headwinds may come in the near future from things like rising beef prices and a spike in marketing costs. 

The chain's margins will likely never again approach the peak they hit four years ago, and the jury is still out on sales-boosting initiatives led by the new-but-not-improved Chipotle Rewards loyalty program. We'll find out soon enough if this diminishing optimism is warranted. Chipotle Mexican Grill delivers its first-quarter results next week. Like one of its overstuffed burritos, its report better be packed with meat.