Burrito baron Chipotle Mexican Grill started the week on a sour note, as Baird lowered its rating on the fast-food concern to neutral from outperform. The covering analyst noted that CMG shares have surged 44% since their second-quarter earnings report, and third-quarter earnings are expected to be robust.

Though the stock opened lower out of the gate, it recovered quickly, easing into positive territory to hit a new all-time high. In early-afternoon trading, the stock is higher by 0.80%.

Despite the valuation concerns held by the Baird analyst, we continue to see CMG as a potentially strong bullish play. Short interest is high, at 11.5% of the stock's float, requiring almost 8 trading days to eradicate all shorted positions. This backdrop provides the foundation for a short-covering rally. Additionally, options players are firmly entrenched in the bearish camp, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.48, a new annual high.

Today's downgrading brokerage is not alone in its skepticism toward CMG. Ahead of this ratings change, CMG earned just 3 buys or better, 10 holds, and 1 sell. The equity's ability to continue rallying despite this backdrop of skepticism bodes well from a contrarian perspective.