On Thursday, Shake Shack (NYSE:SHAK) received a reaffirmed vote of confidence from Raymond (NS:RYMD) James, as the firm maintained a Strong Buy rating and a $160.00 price target on the company's stock. Following a series of investor meetings at the Raymond James Technology, Media & Telecom (BCBA:TECO2m) (TMT) and Consumer Conference, the firm's positive stance on Shake Shack's prospects was bolstered.
The meetings, which included Shake Shack's CEO Rob Lynch and CFO Katie Fogertey, highlighted the company's potential for comparable sales growth and margin expansion in 2025. Raymond James sees significant opportunities for Shake Shack to enhance operations, margins, and returns on new units.
With revenue growth of 16.38% and a healthy current ratio of 2.01, InvestingPro data shows 12 analysts have revised their earnings upward for the upcoming period. The firm anticipates an update on the U.S. Total (EPA:TTEF) Addressable Market (TAM), which is expected to be several times its current size, and an open-ended International TAM.
Despite Shake Shack's impressive 86% year-to-date gain, Raymond James believes there is still potential for further stock appreciation, though InvestingPro's Fair Value analysis suggests the stock is currently overvalued. This outlook is supported by the firm's Discounted Cash Flow (DCF) analysis, which suggests a fair value of approximately $160, and the anticipation of continued positive news flow and momentum for the company through 2025.
In other recent news, Shake Shack has experienced a flurry of positive analyst attention following strong third-quarter results. Stifel increased its price target on Shake Shack shares to $115, maintaining a hold rating. The firm's revised projections, including a 4.5% increase in sales and a rise in restaurant operating margin to 22.0%, reflect the company's stronger-than-anticipated performance. Furthermore, Stifel set its 2025 earnings per share estimate for Shake Shack at $1.25, higher than the Street's expectation.
TD (TSX:TD) Cowen also demonstrated confidence in Shake Shack, raising the company's price target to $140 due to CEO Rob Lynch's growth initiatives. These strategies, which include increased marketing efforts and enhanced culinary offerings, are expected to support sustained growth. Baird maintained a neutral rating on Shake Shack but increased the price target to $122, noting strengths in profitability and sustained customer traffic.
Deutsche Bank (ETR:DBKGn) maintained a hold rating on Shake Shack's stock, raising the price target to $133. The firm cited the company's effective marketing and operational improvements as the reason for the upgrade. Truist Securities also increased its price target for Shake Shack to $144, maintaining a buy rating based on the company's strong same-store sales and adjusted EBITDA.
Shake Shack reported a 14.7% year-over-year increase in total revenue, reaching $316.9 million. Adjusted EBITDA saw a significant rise of 28%, reaching $45.8 million. The company also demonstrated robust expansion plans, opening 17 new locations. Looking ahead, Shake Shack projects total revenue for Q4 2024 to be between $322.6 million and $327 million, and full-year 2024 revenue is expected to reach approximately $1.25 billion. Adjusted EBITDA for the full year is projected to grow 27% to 29%, reaching between $168 million and $170 million.
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