Everyone has to eat. It’s a question, however, of what that keeps some restaurant stocks in high clover while others plunge. Two major restaurant chains—Domino’s Pizza (NYSE:DPZ) and Shake Shack (NYSE:SHAK)—both saw big gains as the result of new placement on a list of likely winners from Piper Sandler. They weren’t alone, however, and Wendy’s (NYSE:WEN) and Portillo’s (NYSE:PTLO) saw gains as well.
Both Domino’s and Shake Shack were declared “top picks” in the restaurant industry, among a list of 15 names. Portillo’s and Wendy’s also got similar nods, with all four stocks landing a Buy-equivalent rating. Shake Shack landed a price target of $84, and Domino’s landed a $349 price target itself. The note even declared that Shake Shack was the “best idea” out of the 15 listed. Shake Shack edged out Domino’s because of concerns about the “overall pizza category,” particularly when compared to Shake Shack’s broader bill of fare.
Domino’s won’t be quietly settling for second, though. It’s recently moved to shut some underperforming stores to save cash, including exiting the entire Denmark market. Around 100 Domino’s locations will depart the network, roughly 3% of Domino’s overall presence. Yet several “tailwinds” are gathering around Shake Shack, including a “historically bullish trendline” and three new lemonade flavors set to emerge this summer. Two are familiar: Strawberry Lemonade and Mango Passionade. The third, Dragonfruit Pomegranate, is completely new.
Portillo’s actually saw the biggest gains out of the mentioned restaurant stocks today and also boasts the best rating and biggest upside. A Strong Buy by analyst consensus, this $28.86 average price target stock comes with 31.18% upside potential. Meanwhile, Shake Shack, a Hold by analyst consensus, comes with the only downside risk of the four at 3.9%.