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Longbow Research Downgrades Shake Shack to ‘Neutral’

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Longbow’s downgrade

Today, Longbow Research downgraded Shake Shack (SHAK) to “neutral” from “buy” on concerns about its high valuation. However, the equity research company is positive on the company’s fundamentals, reports CNBC.

With Shake Shack’s SSSG (same-store sales growth) base for calculation continuing to expand outside of New York, Longbow expects the company’s SSSG to be modestly positive over the next 12–18 months. In the longer run, Longbow expects the opening of new restaurants and their improved productivity to drive Shake Shack’s growth.

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Other analysts’ recommendations

Of the 11 analysts covering Shake Shack, 27.3% recommend “buy,” 63.6% recommend “hold,” and 9.1% recommend “sell.” Their average 12-month target of $52.90 for the stock implies an 11.1% fall from its April 16 price of $59.49.

Today, Wedbush raised its price target from $54 to $60, and on February 26, SunTrust Robinson raised it from $56 to $58. In contrast, Stifel and Piper Jaffray lowered their price targets that day, from $55 to $45 and $62 to $59, respectively.

Peer comparison

Of the 31 analysts covering Chipotle Mexican Grill (CMG), 29.0% recommend “buy,” 54.8% recommend “hold,” and 16.1% recommend “sell.” Their average 12-month target of $604.38 for the stock implies a 14.5% fall from its April 16 price of $706.48.

Of the 23 analysts covering Wendy’s (WEN), 56.5% recommend “buy,” and 43.5% recommend “hold.” Their average 12-month target of $19.16 for the stock implies a 2.8% upside to its price of $18.63.

Of the 14 analysts covering Jack in the Box (JACK), 42.9% recommend “buy,” while 57.1% recommend “hold.” Their average 12-month target of $91 for the stock implies a 17.0% upside to its price of $77.79.

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