Fast-casual restaurant chain Shake Shack (NYSE:SHAK) surged 5.2% in premarket trading today, and has held onto those gains going into this morning's trading, adding more to the momentum besides. A recent shift in sentiment at Goldman Sachs gave the company a boost, though the opinion out of the broader analyst sector hasn't been quite so bright in recent days.
Goldman Sachs Pushes Shake Shack Higher
Goldman Sachs' reevaluation of Shake Shack stock going forward points to several factors as good reasons to get in now. The biggest reason is likely the recent pullbacks seen in the stock; shares stood at $112.17 around a month ago and currently trade at $92.33 as of this writing.
Goldman analyst Jared Garber pointed to other reasons in support of Goldman's analysis as well. The company's balance sheet is solid, reports note, and the company's long-term growth potential also supports the belief that Shake Shack stock can gain from here. Garber looks for further rebound thanks to Covid-19 as well, considering it one of the last major rebound plays left. With earlier reports this month suggesting that Shake Shack was overvalued, the recently-seen pullback may help on this front.
Indeed, the company has substantial plans for expansion. Recent word from Randall Garutti, Shake Shack's CEO, notes that the company is on track to open “...between 35 and 40 new company-operated Shacks this year across both urban and suburban markets.” Garutti further noted that the company's overall strategy is making a shift; Shake Shack is poised to focus more on the suburban market than the urban market with those new openings. Those gains won't be the last ones, either; the company looks to open between 45 and 50 new Shake Shack locations next year, though those plans are contingent upon no new Covid-related interference. As of May 6, there were still 16 Shake Shack locations closed due to the pandemic.
Garutti also pointed out that the company is still experiencing recovery in both urban and suburban markets, with urban markets seeing less recovery due to the still-reduced traffic from office workers and tourists, both of which have been a reduced factor in recent days.
What Are Financial Analysts Saying About SHAK Stock?
Shake Shack news has been fairly positive of late, but the word from financial analysts—as based on our latest research—still calls for caution. The company has held a consensus rating of “hold” for the last two years. However, there have been some signs of sentiment shifting to the more bullish side of late, giving the Shake Shack stock forecast some new potential bright spots.
A year ago, the company had three “buy” ratings, 13 “hold”, and three “sell” ratings to its credit. Six months ago, that shifted to four “buy”, 15 “hold” and three “sell.” Today, we stand at six “buy”, seven “hold” and two “sell.” It's clear the “hold” sector is departing the field, and the “sell” side is losing ground as well while “buy” sentiment has been steadily gaining over the last year. It's not enough to tip the scale, but certainly a point to consider.
SHAK price targets, meanwhile, occupy a broad range. The current average is $97.59, which is established by a low of $50 and a high of $150. With Shake Shack stock currently selling slightly lower than the average price target, there is upside potential on hand.
While the most recent moves in the analyst sector have been positive, that's not the case for the entirety of recent analyst opinion. Goldman Sachs' upgrade was supported by a similar move from Wedbush earlier today, that saw Shake Shack stock upgraded from “neutral” to “outperform” and the price target raised from $114 to $118. However, for most of the month before this recent outburst, the news was nowhere near so positive. Deutsche Bank lowered its price target from $107 to $95, while Morgan Stanley dropped its target from $104 to $101. Cowen did the same on the same day as Morgan Stanley, going from $97 to $93 and, about a month before that, JPMorgan Chase & Co. dropped the target from $90 to $80.
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