UBS lowers Shake Shack stock price target to $104 on industry pressure

Investing.com - UBS lowered its price target on Shake Shack (NYSE:SHAK) to $104.00 from $140.00 while maintaining a Neutral rating ahead of the company’s third-quarter results due October 30. Currently trading at $90.92, the stock has declined nearly 29% year-to-date, according to InvestingPro data, which shows the company’s overall financial health score as "GOOD."

The firm anticipates sequential improvement in same-store sales trends, continued margin expansion, and a reiterated store development outlook for the burger chain. UBS expects Shake Shack to reaffirm its 2025 guidance for sales of $1.4-1.5 billion and restaurant margins of approximately 22.5%. The company has demonstrated strong revenue growth of 13.1% over the last twelve months, with current gross margins at 39.5%.

UBS believes these targets remain achievable given benefits from multiple sales initiatives and cost savings efficiencies. The firm noted that investor expectations for same-store sales vary but average around 2.5% for the third quarter, compared to consensus estimates of 2.7%.

The price target reduction reflects broader valuation pressure across the restaurant industry, particularly among fast casual growth stocks, given the challenging macroeconomic environment. UBS described the current valuation as "particularly undemanding" at approximately 14.5x 2026 estimated EBITDA.

UBS remains encouraged by Shake Shack’s efforts to strengthen sales growth through menu innovation, marketing, and promotional activity, while maintaining a focus on profitability and multiyear margin gains. The firm indicated it would need to see sustainable traffic and sales momentum before taking a more constructive view on the shares.

In other recent news, Shake Shack Inc . announced its financial results for the second quarter of 2025, highlighting a robust performance. The company reported total revenue of $356.5 million, exceeding its previous guidance. Additionally, Shake Shack’s system-wide sales experienced a 13.7% increase year-over-year, totaling $549.9 million. These figures underscore the company’s positive sales growth during this period. Despite the strong earnings report, the company’s stock saw a slight decline in after-market trading. This comes after a notable increase during regular trading hours. The recent developments reflect Shake Shack’s continued momentum in the market.

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