Shake Shack (SHAK) PT Lowered to $100 as Piper Sandler Deflates the High Valuation

Piper Sandler analyst Nicole Miller Regan lowered the price target on Shake Shack (NYSE: SHAK) to $100.00 (from $131.00) to reflect a lower multiple after a recent visit to its Innovation Kitchen. The multiple remains lofty however, at ~40x downwardly revised FY22 EV/EBITDA estimates (from 50x prior). EPS for '22 drops to $0.40 from $0.58.

The analyst reiterated an Overweight rating, stating "We recently stopped by the Shake Shack Innovation Kitchen in New York. Here, the culinary team focuses on both improving core and identifying new menu platforms; all of which is done in concert with operating teams throughout the company (ie marketing, finance, etc.). In regard to inflation, beef is nearly 1/3 of the basket. The company is actively managing menu price increases. In regard to menu, the brand's nonreplicable offering relative to its category as a way to balance price with affordability may
be undervalued. In addition to price, the company also has other tools to manage its menu unlocks . For example, the latest shake was first offered to customers via the direct digital ordering channel."

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