Why the stock of Shake Shack has jumped today
Shake Shack (NYSE: SHAK) rose 4.5% on Tuesday after two separate analyst teams improved its stock.
Goldman Sachs Analyst Jared Garber upgraded his rating on Shake Shack from neutral to buy. He sees the Restaurant share rising to $ 109 per share, about 23% more than its current price near $ 88.
Garber believes that the sharply lower share following his first quarter earnings report earlier this month offers investors a chance to pick up shares at an attractive price. Although he warns that Shake Shack’s urban sales could face short-term challenges from coronaviruses, Garber argues that the company’s long-term expansion strategy remains intact.
Image source: Getty Images.
Meanwhile, Wedbush analyst Nick Setyan upgraded his rating of Shake Shack’s stock from neutral to outperforming. He sees his stock price climb to $ 118.
Like Garber, Setyan argues that investors are putting too much emphasis on Shake Shack’s short-term struggles and overlooking the likelihood of a longer-term recovery. So, he believes the recent drop in the stock was an overreaction – a reaction more patient investors should use as a buying opportunity.
Garber also cited Shake Shack’s cash-rich balance sheet, which should allow it to both build new restaurants and strengthen its delivery network. Setyan also pointed to the burger chain’s potential for expansion: he postulates that Shake Shack may ultimately have over 1,000 stores in the US alone, up from 320 today.
If these analysts are correct and the company manages to triple the number of its stores, Shake Shack shareholders will likely be well rewarded in the years to come.
10 stocks we like better than Shake Shack
When investment geniuses David and Tom Gardner have stock advice, he can pay to listen. After all, the newsletter they’ve been distributing for over a decade, Motley Fool Fellowship Advisor, has tripled the market. *
David and Tom have just revealed what they believe to be the ten best stocks for investors to buy now … and Shake Shack was not one of them! That’s right – they think these 10 stocks are even better buys.
* Stock Advisor returns as of May 11, 2021
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.