Shake Shack (NYSE:SHAK) shares rose more than 4% in pre-market today after TD Cowen analysts upgraded the company to Outperform from Market Perform and increased the price target to $125 from $91.

The analysts suggested Shake Shack stands out as the company most likely to surpass the adjusted EBITDA expectations for 2024-2026 within their coverage. The upgrade is driven by a strategic shift towards leveraging the brand’s growing scale, with detailed margin analysis leading to the projection of industry-leading restaurant margins of 21.0%, 21.6%, and 22.0% for 2024 to 2026 respectively, compared to the consensus estimates.

The analysts posit a potential bull case for a 23.0% restaurant margin by 2026 under less conservative assumptions. Additionally, the analysis forecasts below-consensus adjusted G&A expenses, anticipating further leverage despite conservative consensus figures. The appointment of a new CEO is seen as a catalyst for narrative change and traffic improvement, as Shake Shack aims to utilize its scale for the next business growth phase.

Consequently, the analysts expect ongoing positive adjustments to EBITDA forecasts due to the potential outperformance in restaurant-level margins and G&A efficiency, positioning Shake Shack shares as their top small to mid-cap pick and second overall.

Deja una respuesta

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *

× ¿Cómo puedo ayudarte?