Shake Shack (SHAK) PT Cut to $45 at Jefferies On Negative Preannouncement

Jefferies analyst Andy Barish lowered the price target on Shake Shack (NYSE: SHAK) to $45.00 (from $50.00) after the company negatively preannounced 2Q SSS implying that the recovery is taking longer than the Street had been expecting. SSS -49% was below Cons -43% as NYC, which accounted for ~20% of total sales pre-COVID, has exhibited a slow recovery. Traffic -60.1%, partially offset by avg check +11.1% driven by bigger order sizes on delivery/to-go and meal kits.

The analyst maintained a Hold rating but believes there is enough cash to see the company through. He stated "SHAK is now generating cash at the restaurant-level given current sales levels and costs, and weekly enterprise-level burn down to $200k (excludes temp 10% hourly premium to staff and new unit capex). Co paid back the $50M it drew from its revolver and now has $184M in cash and equiv. Cash burn appears under control even with restart/ramp costs and plenty left for LT growth opportunities".

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