Analysts Weigh in on Shake Shack in Reaction to High Valuation
TipRanks | Feb 25, 2015 08:21AM ET
Popular upscale hamburger chain Shake Shack Inc (NYSE:SHAK) announced its highly coveted IPO on January 30th, pricing shares at $21 to start. Investors were eager to get their hands on Shake Shack shares, more than doubling the stock’s price on its first day of trading and closing at $45.90.
The company currently operates just 63 restaurants in nine different countries, with 16 of them located in the metropolitan New York City area. The company said it plans to expand slowly with a goal to open 10 new locations in the United States every year, as well as adding more international locations.
The Shake Shack excitement has started to wear off as the stock dropped roughly 9% in mid-February. Since this dip, Shake Shack’s stock has slightly rebounded, closing at $43.47 on February 24th. Investors have begun to question the stock’s valuation with the measured growth strategy presented by CEO Randy Garutti and Chairman Danny Meyer.
Garutti said in a statement, “I love the growth pace we’ve outlined…if we were trying to open 50 new restaurants this year I’d be worried.”
A handful of analysts weighed in on Shake Shack on February 24th in reaction to the company’s current high valuation.
Stifel Nicholaus analyst TipRanks is Hold.
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