Morgan Stanley has lost hope for Chipotle

Morgan Stanley analysts are losing hope for Chipotle's post-E. coli recovery.

The chain's sales rebound is slowing, with many customers saying they will never return or wait at least a year to go back, according to the firm's survey of 2,000 consumers.

While Chipotle has predicted that sales will return to pre-outbreak levels by next year, Morgan Stanley analysts believe the recovery will take many years.

"The sales recovery will remain more protracted than the market believes, and possibly more costly as a result, as [Chipotle] likely needs to ramp up marketing spend to lure consumers back in," analysts wrote in a note published Friday, in which they downgraded the stock from "overweight" to "equal weight."

"A full sales recovery to prior peak volumes could take years in our view, as evidenced by the fact that, according to our survey, approximately 25% of [Chipotle] customers either have stopped going or reduced frequency, even six months after the last reported food safety incident," they wrote.

Chipotle's revenue dropped 23.4%, to $834.5 million, in the first quarter of the year. Same-store sales dropped nearly 30%.

About 13% of Chipotle customers say they won't go back to the chain any time soon, or at least for another year, according to Morgan Stanley's survey.

That metric is relatively unchanged since January, indicating a permanent reduction to Chipotle's customer base, analysts said.

Additionally, about two thirds of Chipotle's regular customers say they continue to visit the chain, but 20% of those said they don't go as often.

The key reason customers gave for not going back is still food safety (about 33%).

But even more concerning for Chipotle is the fact that nearly a quarter of customers say they aren't returning to the chain because they have found other restaurants they like better.

"This underscores the fickle nature of restaurant consumers and the challenges [Chipotle] faces to bring back lapsed customers," analysts wrote.