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On Thursday, Shake Shack Inc . (NYSE:SHAK) stock received an upgrade from CFRA, moving from a Hold to a Buy rating. The research firm maintained its price target for the company at $134.00, well above the current stock price of $90.64. According to InvestingPro data, analyst targets for the stock range from $95 to $160, with the company currently trading at a high earnings multiple of 353x. Stifel analysts cited an attractive valuation and improving fundamentals as the key drivers for the upgrade.
The analysts emphasized that the current market valuation does not fully appreciate Shake Shack’s earnings growth potential, which they believe is being overshadowed by short-term macroeconomic concerns. Recent InvestingPro data shows the company achieved 15.2% revenue growth in the last twelve months, with revenue forecast to grow 17% in 2025. They pointed out that despite initial weather-related sales challenges at the beginning of the first quarter of 2025, the company is expected to post a year-over-year same-store sales increase of 4%, surpassing the consensus estimate of 2.98%.
Shake Shack’s expansion strategy is also a factor in the positive outlook, with plans to open 85 new restaurants in 2025. This follows the opening of 43 company-operated locations in 2024, some of which achieved average unit volumes of $4 million. CFRA views this aggressive expansion as an underappreciated opportunity for Shake Shack to extend its market presence and potentially benefit from economies of scale.
The firm’s earnings per share (EPS) estimates for Shake Shack remain steady at $1.25 for 2025 and $1.56 for 2026. The $134 price target is based on a 2025 enterprise value/EBITDA (EV/EBITDA) multiple of 27 times. CFRA justifies this premium multiple by pointing to strong same-store sales and the company’s accelerated unit growth.
In conclusion, CFRA’s upgrade reflects their confidence in Shake Shack’s strategic initiatives and growth trajectory, which they believe will lead to significant value creation for investors. The firm anticipates that Shake Shack’s efforts in menu innovation, traffic growth, and pricing will drive positive same-store sales, bolstering the company’s performance in the coming year. For deeper insights into Shake Shack’s valuation and growth metrics, including 16 additional ProTips and comprehensive financial analysis, investors can access the full research report on InvestingPro.
In other recent news, Shake Shack reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.26, compared to the forecasted $0.16. The company’s revenue also exceeded projections, reaching $328.7 million against an expected $325.3 million. This positive performance led to a notable pre-market stock surge. Analysts from Truist Securities raised their price target for Shake Shack shares to $154.00, maintaining a Buy rating, while Barclays (LON:BARC) adjusted its target to $155 with an Overweight rating, reflecting confidence in the company’s market positioning and strategic initiatives.
Shake Shack’s same-store sales showed resilience despite adverse weather conditions, with a 4.3% increase contributing to revenue growth. The company also reported significant improvements in restaurant-level margins, enhancing profitability. Stifel analysts raised their price target for Shake Shack from $110.00 to $120.00, maintaining a Hold rating, while acknowledging the company’s efforts to improve efficiency and margins. Shake Shack’s strategic plan emphasizes sales growth and operational efficiencies, with an ambitious expansion target of 1,500 locations across the U.S. by 2025.
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