Shares of Chipotle Mexican Grill (CMG) fell Tuesday after the restaurant chain "clarified" its second quarter outlook, appearing to confirm that costs related to food, marketing, and promotion will remain elevated as it seeks to regain consumer trust following its 2015 food scares.

CHIPOTLE WARNS ON COSTS: In a regulatory filing after Monday's close, Chipotle "clarified" its financial outlook in connection with an investor meeting, saying that "for Q2, we continue to expect food costs to be approximately 34.2% of sales, and marketing and promotion costs to be up approximately 20-30 basis points versus Q1 to 3.6%-3.7% of sales. As a result, we expect other operating costs as a percentage of sales for Q2 to be at or slightly higher than reported for Q1. For the full year, we continue to expect comparable restaurant sales increases in the high single digits."

PIPER MAKES ONLY MINOR TWEAKS: Piper Jaffray's Nicole Regan highlighted that the news follows a "solid" Q1 report and says the Q2 guidance update necessitates only "relatively minor" tweaks to her quarterly models. The analyst maintains her earnings predictions for both 2017 and 2018, adding that the firm's latest checks generally reflect the consensus opinion that trends are now "headed in the right direction," likely helped by Chipotle's TV campaign. Regan reiterated an Overweight rating and $530 target on the stock while noting that its next catalyst is "stringing together a series of steady quarterly improvements."

MAXIM PREFERS DEEPER PULLBACK: While keeping a Hold rating and $440 target on Chipotle, Maxim's Stephen Anderson cut his Q2 profit estimate to $2.62 from $2.87 per share on the company's likely higher costs, adding that he had previously expected food expenses to improve as promotional activity and commodity prices eased. The analyst models double-digit comparable sales growth for the quarter while warning of impacts from the Easter holiday shift and Chipotle's recently-disclosed data breach, saying he still prefers to wait for a "deeper pullback" before recommending the stock.

DEUTSCHE HIGHLIGHTS MARGIN CONCERNS: Writing that margin recovery "remains under pressure," Deutsche Bank analyst Brett Levy says food, marketing, and other operating costs continue to form an "apparent drag on restaurant-level profits." Levy lowered his second quarter EPS view by 20c to $2.04 and highlighted that management indicated sequential expense pressures are expected to persist and could near 100 basis points of additional costs versus the prior consensus forecast for restaurant-level margins. The analyst keeps a Sell rating on the shares, arguing that Chipotle "faces an uphill battle" to regain lost sales while lifting margins

PRICE ACTION: Dropping sharply upon market open, shares of Chipotle remain down 6.7% to $428.31 in late day trading.