Bank of America analysts on Thursday downgraded fast food restaurant Shake Shack (NYSE:SHAK) from a Buy rating to a Neutral rating, causing shares to fall. The team based their judgment on new estimates projected for the company’s business.
BofA analyst Sara Senatore and her team said the rationale for the new rating is based on normalizing same-store sales growth, moderating margin improvement, and a unit growth outlook that aligns with the consensus expectations.
Shake Shack enjoyed a merry ride in post-COVID-19 sales growth and improved pricing. But with COVID-19 far gone and the company’s AUVs stabilizing, the pricing for its product is expected to moderate. Based on their analysis, BofA analysts placed a price target of $66 on SHAK in the hopes that the company would open 860 domestic stores in nine years and produce EBITDA of $638M.
Is Shake Shack a buy, sell, or hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SHAK stock based on five Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic above. Nevertheless, the average price target of $78.33 per share implies a 39.63% upside potential.
