Shake Shack (SHAK) PT Raised to $115 at Oppenheimer as a Key COVID Turnaround Play

Oppenheimer analyst Michael Tamas raised the price target on Shake Shack (NYSE: SHAK) to $115.00 (from $100.00) after meeting with management and becoming convinced that Street EBITDA estimates are too low. He sees the company as a recovery play for several reasons:

• the brand's enhanced digital platform is now ~60% of sales and could represent a substantial value opportunity as in-app delivery is turned on and new store designs roll-out
• company-owned unit growth should accelerate, ramping to all-time high levels in '22 (+45–50 units)
• the better-than-feared 4Q pre-announcement (-17.4% SSS vs. Street's -19.7% estimate), is strong enough to warrant an increase in EBITDA estimates through '22

The analyst maintained an Outperform rating, stating "We raise EBITDA estimates through '22E to $21.7M/$82.1M/$122.8M from $19.3M/$80.6M and $117M, respectively. This incorporates slightly better sales/margins and increased unit growth, which aligns with management's commentary. Our '22E EBITDA sits 11% above consensus, with a bias for more upside as we believe our sales/margin assumptions tilt conservatively".

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