Investing.com -- Chipotle Mexican Grill (NYSE:CMG) has faced mounting scrutiny following a sharp decline in its share price, raising questions among investors about the strength of its long-term growth trajectory.

The stock is down about 20% from its recent peak, after posting its first negative same-store sales growth (SSSG) quarter since the food safety crisis a decade ago, according to a research note from analysts at Bernstein in a note dated Friday.

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Bernstein analysts outline three core arguments fueling the emerging bear case. The first centers on market share concerns, with investors worried that Chipotle may lose ground to quick-service restaurant chains amid rising promotional activity.

However, Bernstein counters that Chipotle has preserved pricing discipline. Despite industry-wide discounting, Chipotle maintains price points that are roughly 15%–20% below those of other fast-casual options, which Bernstein believes strengthens its value proposition to consumers.

The second concern is the perceived lack of near-term catalysts in the face of broader macroeconomic pressure.

The analysts acknowledge that the first quarter of 2025 marked a low point, but argue that a recovery could begin as early as the second quarter.

Contributing factors include increased summer marketing spending, set to rise by 30% year-over-year, ongoing improvements in order throughput, and a new limited-time offer aimed at reigniting consumer interest.

The third pillar of the bear case suggests Chipotle is entering a slower growth phase and should therefore be valued more conservatively.

The company currently trades at a price-to-earnings multiple of 45.6x on 2024 earnings, with that figure projected to fall to 33.7x by 2026.

While bears argue this de-rating reflects a structurally lower growth profile, Bernstein disagrees.

The analysts maintain that Chipotle’s long-term growth algorithm remains intact, citing mid-single-digit SSSG, 8%–10% annual unit growth potential, and resilient restaurant-level margins.

They emphasize that only half of Chipotle’s stores have hit throughput targets, leaving room for operational improvement.

Notably, Chipotle’s restaurant-level margins remain the highest in the industry at 26.8%, ahead of Taco Bell’s 24.4% and McDonald’s (NYSE:MCD) 14.8%.

Bernstein attributes this resilience to efficient cost management and strong incremental margins, which are projected to be around 40%.

Despite the recent negative sentiment, Bernstein raised its price target on the stock from $60 to $65, implying a 28% upside from the May 22 close at $50.78. The valuation is based on a forward P/E of 43x on projected 2026 EPS of $1.50.

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While the brokerage acknowledges near-term volatility driven by macro uncertainty and weaker Q1 performance, Bernstein argues that these are not signs of long-term structural decline.

Instead, the analysts believe the market may be underestimating Chipotle’s capacity for a near-term sales rebound and sustained margin strength.

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