Analysts are split on whether investors should buy or avoid Chipotle after its shares dropped on the news that customers fell sick after eating at one of its restaurants.

The restaurant chain's stock has been struggling to recover from outbreaks of food-borne illnesses in 2015.

In Wednesday's premarket, the share price was down 1.2 percent. Its shares fell as much as 7.6 percent Tuesday before closing down 4.3 percent because of eight illness reports made from July 14 to July 17 at a Chipotle in Sterling, Virginia.



Chipotle shares declined 10 percent in the past 12 months through Tuesday versus the S&P 500's 14 percent return. The stock is also down 1 percent this year compared with the market's 10 percent performance as worries about food safety continue to plague the company.



"While norovirus at a single location is not overly significant on the surface, we believe there is greater uncertainty now as there is a reasonable probability that media coverage will outweigh the severity of the incident and create renewed same-store sales weakness, expanding downside risk within our framework," BMO Capital Markets' Andrew Strelzik wrote in a note to clients Wednesday.



He noted that his searches on Google News yielded roughly 400 news articles on the illness reports.

Chipotle suffered from previous E. coli food safety issues in 2015, which led to a steep drop in sales.



Strelzik lowered his rating for Chipotle shares to market perform from outperform and decreased his price target to $350 from $550, representing 7 percent downside from Tuesday's $374.98 close.



Wells Fargo also downgraded the restaurant chain to market perform from outperform on the "headline" perception risk.



"Only 16 months removed from Chipotle's last food scare, we believe consumer response to Tuesday's norovirus headlines could be amplified with Chipotle still building back food safety credibility with many consumers," Wells Fargo analyst Jeff Farmer wrote in a note to clients Wednesday. "We expect the Chipotle system to face heightened traffic headwinds over the next several weeks."



Farmer lowered his price forecast for Chipotle shares to $375 from $470.



On the flip side, Telsey Advisory Group believes the stock's drop provides investors an opportunity to benefit from the company's longer-term plans.



"We believe yesterday's pullback in CMG shares has tipped the risk/reward in its favor," Telsey analyst Bob Derrington wrote in a note to clients Wednesday. "We believe management's more aggressive plan in menu innovation (incl. current tests of Queso, margaritas, salads), technology enhancement, together supporting off-premise sales, catering and ultimately profits combine to add upside potential to our revised 2018 estimates."



Derrington raised his rating on the restaurant chain to outperform from market perform and reiterated his $440 price target for the shares.



Chipotle did not immediately respond to a request for comment on the Wall Street research coverage.

On Tuesday, its food safety director, Jim Marsden, said the company notified local health department officials of the incident.

"Norovirus does not come from our food supply, and it is safe to eat at Chipotle. We plan to reopen the restaurant today," he said in a statement Tuesday. "We take every report of illness seriously. In accordance with our established protocols, our team is working to ensure the safety of our customers and employees, including voluntarily closing the restaurant yesterday to conduct a complete sanitization."

The company is slated to report second quarter earnings results on July 25.



— CNBC's Michael Bloom contributed to this story.