Goldman Sachs thinks Shake Shack could surge 80% in just one year, fueled by an exclusive partnership with GrubHub (SHAK)


Goldman Sachs on Wednesday increased its price target on shares of Shake Shack to $115, roughly 80% higher than where shares traded at Tuesday’s close.
The upgrade is based on positive comments Shake Shack management made around the restaurant’s exclusive partnership with GrubHub.
Shares of Shake Shack surged 10% Wednesday.
Watch Shake Shack trade live on Markets Insider.

Goldman Sachs is a fan of Shake Shack.

On Wednesday, Goldman Sachs raised its 12-month price target on shares of the restaurant chain to $115 based on a long-term discounted cash flow that contemplates 645 company-owned units and 850 domestic and international licensed units by 2038, according to a Wednesday note.

That’s a roughly 80% gain from where shares of the fast-food joint traded at Tuesday’s close. Shares of Shake Shack rose as much as 10% Wednesday.

Goldman’s price upgrade and reaffirmed “buy” rating on the company come following a presentation from Shake Shack’s CEO Randy Garutti and CFO Tara Comonte at the ICR Conference in Orlando, Florida. During the presentation, Shake Shack management made positive comments about the company’s integration with GrubHub, analyst Katherine Fogertey wrote in a note Wednesday.

So far, “details around the GRUB integration suggest the disruption could be more manageable than feared,” Fogertey wrote. Shake Shack had announced in August that it would transition to an exclusive partnership with GrubHub, shifting from four delivery partners to only one starting in the third quarter.

More color on the integration with GrubHub is welcome as Shake Shack slipped as much as 14% in the third quarter when earnings showed that same-store sales growth was lower than expected, driven in part by the transition to GrubHub.

But Shake Shack since adjusted its future traffic estimates appropriately, and “as part of the partnership, GRUB has provided SHAK with detailed …read more

Source:: Business Insider


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