Shake Shack Stock Upgraded to Market Perform by Raymond James

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The decline of Shake Shack stock in 2022 ‘creates a more balanced risk/reward,’ says Raymond James.

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Fast-food company Shake Shack should see sales improvements in the coming months, according to one Raymond James analyst.

Brian Vaccaro Upgraded his rating on the stock to Market Perform from Underperform after citing potential inflation moderation and the recovery of urban markets. He didn’t assign Shake Shack (ticker: SHAK) a price target.

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“In the near-term, average weekly sales…should continue to improve as urban markets recover and margin visibility should improve as food inflation is expected to moderate” through the second half of 2022, Vaccaro wrote in a research note.

Shake Shack shares were up 1.1%, at $45, in recent trading, while the S&P 500 was up 1%. Shake Shack has fallen 38% this year. Vaccaro wrote that the decline of Shake Shack stock “creates a more balanced risk/reward.”

Shake Shack, which reported first-quarter earnings on May 5, topped Wall Street’s bottom-line estimates but forecast lower revenue than analysts expected for the second quarter.

According to Vaccaro, store margins for Shake Shack are continuing to recover but remain below 2019 levels. He believes post-Covid per-store sales volumes and store margins will likely settle below pre-Covid levels due to “rapid unit growth” and “the continued drag of underperforming units in urban markets, especially NYC.”

Write to Angela Palumbo at [email protected]

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Credit: www.marketwatch.com /

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