Shake Shack (SHAK) Testing 3P Price Increase - Credit Suisse
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Credit Suisse analyst Lauren Silberman reiterated a Neutral rating and $102.00 price target on Shake Shack (NYSE: SHAK) after trends took a step back in Feb with SSS of -16% (Suburban -4%, Urban -27%), partially due to weather after posting improvements in Jan, with SSS of -5% (Suburban +8%, Urban -17%). AWS volumes of $62Kwere largely consistent in 4Q, with improvement to $63K in Jan, and a decline to $60K Feb to-date. SHAK reiterated its expectation to open 35-40 company units in 2021 & 45-50 in 2022, representing growth of ~45% over the next two years.
The analyst stated "SHAK is testing a 5% 3P delivery menu price increase to offset headwinds & incentivize customers to transact through its direct digital channels, though margins are likely to remain challenged given sales pressure, a heightened delivery mix and ongoing labor & digital investments. We believe the breadth of new formats, accelerated digital adoption and strong brand affinity well position SHAK to increase its addressable market long-term, though at current valuation, we remain Neutral."
Shares of Shake Shack closed at $118.48 yesterday.
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