Street Calls of the Week
On Thursday, Truist Securities raised the price target for Shake Shack (NYSE:SHAK) shares to $154.00, up from the previous target of $143.00, and maintained a Buy rating on the stock. The increase comes in response to the company’s fourth-quarter 2024 results, which were preannounced, and its positive guidance for the first quarter of 2025 same-store sales (SSS) and adjusted EBITDA. With the stock currently trading at $123.94 and analyst targets ranging from $107 to $160, InvestingPro data shows that 8 analysts have recently revised their earnings estimates upward for the upcoming period.
The analyst at Truist Securities noted that despite challenges such as weather disruptions, wildfire headwinds, a promotional mismatch, and an uncertain economic environment, Shake Shack has shown strong SSS momentum moving into the first quarter of 2025. This performance is seen as a testament to the company’s robust market positioning and effective SSS drivers, including marketing strategies and improved speed of service. The company’s market position is reflected in its impressive 16.38% revenue growth over the last twelve months.
The report also highlighted Shake Shack’s success in executing operating cost initiatives, which have already improved margins by approximately 50 basis points in 2024. Further improvements are anticipated in 2025, as the management team continues to focus on productivity enhancements. The upcoming opening of a kitchen innovation lab is expected to contribute to these efforts.
Shake Shack’s upward revision in its adjusted EBITDA guidance for 2025 suggests confidence in the company’s continued growth and profitability. The analyst’s comments reflect an optimistic outlook for Shake Shack’s financial performance and its ability to navigate a complex market landscape effectively.
In other recent news, Shake Shack reported its fourth-quarter 2024 earnings, which exceeded analyst expectations. The company posted an earnings per share of $0.26, surpassing the projected $0.16, and achieved a revenue of $328.7 million against an expected $325.3 million. This performance was partly driven by a 4.3% increase in same-store sales and a significant expansion in restaurant-level margins. Looking forward, Shake Shack aims to expand its U.S. presence to 1,500 locations, supported by strong operational strategies and market positioning. Barclays (LON:BARC) analyst Jeffrey Bernstein adjusted Shake Shack’s price target to $155 from $159, maintaining an Overweight rating, following the company’s positive earnings and guidance. Bernstein noted the company’s resilience in comparable sales and an increase in EBITDA guidance for 2025 by approximately $5 million. These recent developments indicate ongoing confidence in Shake Shack’s growth strategy and ability to navigate market challenges.
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