Chipotle Mexican Grill's sales recovery might be getting more expensive, according to Baird.

Analyst Chris O'Cull downgraded Chipotle shares to Neutral from Outperform on Monday, after taking over coverage of the restaurant chain. He also lowered his price target to $40 from $44.

Chipotle shares rose about 2.8% on Monday to trade around $38.

The concern isn't that Chipotle (ticker: CMG) has stopped growing, the analyst wrote, but that it might have to spend considerably more to produce the kind of sales growth it delivered in the past.

"Put simply, CMG may need to spend more to grow less," O'Cull wrote.

Baird says Chipotle will need greater investment to generate low-single-digit comparable-sales growth, in percent terms, rather than the mid-single-digit pace the company has historically achieved. That means a slower recovery in margins.

O'Cull's concern comes despite Chipotle's signs of improvement in the second quarter. Comparable sales rose 2.2% from a year ago, following 0.5% year-over-year growth in the first quarter and a 2.5% decline in the fourth quarter of 2025.

Revenue increased 9.3% to $3.35 billion in the period, and management raised its full-year comparable-sales outlook to low-single-digit percent growth.

But the improvement came with pressures on profitability: Restaurant-level operating margin fell to 25.2% from 27.4% a year earlier as food and labor costs increased and Chipotle invested more in operations and hospitality.

The company has also had to navigate a new food-safety scare this summer. Federal regulators linked a multistate Salmonella outbreak to jalapeños from Mexico that were supplied to Chipotle and other restaurants.

Chipotle began switching suppliers at affected stores well before the Food and Drug Administration publicly identified the broader outbreak, and the agency says there is no longer an ongoing risk from eating at Chipotle related to the outbreak.

Still, the headlines contributed to renewed concerns about traffic and sent the shares sharply lower in early August. Chipotle closed Friday at $36.90, leaving it just 1.5% below its Aug. 3 close, before the outbreak-related selloff.