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Word on the Street: What Analysts Think about SHAK after 1Q16

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Analysts’ target prices

As of May 13, 2016, Shake Shack (SHAK) was trading at $37.6. Its share price may have already priced in the estimates that we discussed earlier in the series. In this article, we’ll look at analysts’ recommendations and estimated price targets for the next 12 months.

SHAK’s better-than-expected 1Q16 results led analysts to increase their consensus median price target for the next 12 months from $40.4 to $41.3, a return potential of 9.8%.

On the higher side, Alton Stump of Longbow Research has forecast that SHAK will reach $48. On the lower side, John W. Ivankoe of JPMorgan Chase has estimated that SHAK’s price will touch $35. SHAK forms 0.01% of the holdings of the Vanguard Russell 2000 ETF (VTWO).

The 12-month price targets for Shake Shack’s peers are as follows:

  • Panera Bread (PNRA): $233.60 with a return potential of 11.2%
  • Chipotle Mexican Grill (CMG): $455.90 with a return potential of -0.5%
  • Jack in the Box (JACK): $83.8 with a return potential of 13.2%
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Analysts’ recommendations

According to a Bloomberg consensus, of the ten analysts surveyed, 20% have “buy” recommendations, 60% have “hold” recommendations, and 20% have “sell” recommendations for Shake Shack. SHAK’s share price generally moves in tandem with analysts’ recommendations. As analysts raise their next-12-month target prices, the price of the stock may also increase, and vice versa.

A company’s share price’s being lower than its target price doesn’t mean it’s an automatic buy. Before investing, investors should carefully analyze the various metrics we’ve discussed in this series.

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