Morgan Stanley on Shake Shack (SHAK): 'a transition period next year should also ensure a smooth handoff'

Morgan Stanley analyst Brian Harbour reiterated an Equalweight rating and $64.00 price target on Shake Shack (NYSE: SHAK).

The analyst comments "The end of an era for SHAK, with Garutti having been there at inception almost two decades ago and leading the company for its entire public life, from a small kiosk in New York to national fast casual brand. Certainly the work has changed materially over that time, and SHAK has continued to grow impressively under his leadership. But the company is also at somewhat of a crossroads, in the process of shifting to scalability and efficiency, where brand/culture building and expansion had been much of the focus in the past, and Garutti led that successfully. We'd argue that SHAK has the advantage of being a well known and respected brand not just in the US but globally, and there is an opportunity to secure a high quality successor for that reason, which should be constructive for the stock. Having a transition period next year should also ensure a smooth handoff, in contrast to a more abrupt departure. The company is also in the midst of a search for a permanent COO, so there is some leadership uncertainty. But we think there is an investor view that operating efficiency and optimizing national scale is the main opportunity for SHAK going forward, with progress already evident (and an activist involved, focused on some of those opportunities), but new leadership in both roles perhaps taking a fresh look at this and adjusting the strategy could also be constructive for the stock. "

For an analyst ratings summary and ratings history on Shake Shack click here. For more ratings news on Shake Shack click here.

Shares of Shake Shack closed at $60.98 yesterday.

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