On Monday, Raymond (NS:RYMD) James reaffirmed its Strong Buy rating and a $160.00 price target for Shake Shack shares (NYSE:NYSE:SHAK), which has delivered an impressive 94.89% return over the past year. The firm's analyst, Brian Vaccaro, highlighted the company's pre-released fourth-quarter results, which surpassed expectations.
According to InvestingPro data, the company maintains a GOOD financial health score, though current trading levels suggest the stock is overvalued relative to its Fair Value. Shake Shack reported year-over-year comparable sales growth of 4.3%, exceeding the consensus estimate of 4.0%. The company's store margins also outperformed Raymond James's estimates, coming in at 22.7% versus the expected 22.0%.
Adjusted EBITDA for the quarter was reported at $46.5 million, which is 16% higher than Raymond James's projection. With a market capitalization of $5.46 billion and trailing twelve-month EBITDA of $127.7 million, InvestingPro analysis reveals the company is trading at premium valuation multiples.
Looking ahead, Shake Shack has provided adjusted EBITDA guidance for 2025 in the range of $200-210 million, slightly above the consensus estimate of $200 million. This forecast reflects better-than-anticipated revenue and store margins, notwithstanding an increase in general and administrative expenses, which are projected to be 11.5% of sales compared to Raymond James's estimate of 11.2%. Moreover, stock-based compensation is expected to rise by over 35%.
Shake Shack has also set ambitious long-term goals, including a total addressable market of at least 1,500 company-operated units. Furthermore, the company has established three-year annual growth targets, which include low teens percentage revenue growth and low-to-mid teens EBITDA growth. The analyst noted that the projected store margins of around 22% could prove to be conservative, considering potential operational and process improvements that may enhance profitability.
These robust financial targets and the company's strong performance, including a 16.38% revenue growth rate, are indicative of Shake Shack's continued growth trajectory and operational efficiency. The reaffirmation of the Strong Buy rating and price target reflects confidence in the company's strategy and market position. InvestingPro subscribers can access 12 additional key insights and a comprehensive Pro Research Report that provides deep-dive analysis of Shake Shack's valuation, growth prospects, and financial health metrics.
In other recent news, Shake Shack has announced an ambitious expansion plan targeting 1,500 outlets, a significant increase from its initial target of 450 outlets set in 2015. The company also reported preliminary unaudited results for the fiscal fourth quarter and year ended December 25, 2024, showcasing a 48% year-over-year growth in Adjusted EBITDA. Shake Shack's CFO, Katie Fogertey, projected a Total (EPA:TTEF) revenue growth of 16% - 18% year-over-year for FY2025.
Barclays (LON:BARC) raised Shake Shack's stock rating and target to $159, forecasting revenue growth of 16.38%. Truist Securities maintained a Buy rating on Shake Shack, with a steady price target of $147.00.
The company's initial guidance for FY2025 suggests Total revenue between $1.45 billion and $1.48 billion, with licensing revenue expected to be in the range of $49.0 million to $51.0 million. The company also plans to open approximately 45 new company-operated Shacks and 35 to 40 licensed Shacks. These are all recent developments in the company's growth strategy.
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