Investing.com -- Bank of America Securities upgraded Shake Shack to Neutral from Underperform on Tuesday, raising its price objective to $101 from $88, as analysts said the company’s initiatives are helping offset a difficult consumer backdrop.

Shares in the fast food chain operator rose nearly 3% in premarket trading Tuesday.

Analysts Sara Senatore and Isiah Austin cited menu innovation and supply chain improvements as the primary drivers behind the more positive view. New offerings, including a Dubai shake and a Korean menu, developed through the company’s internal stage-gate testing process, along with a featured value menu of $1-$3-$5 items available through the app, are contributing to more stable same-store traffic after a period of declines.

"Bank of America Institute card data showing younger consumers (whom SHAK overindexes to) spending more on restaurants could also help," the analysts added.

The team also pointed to supply chain work as a meaningful margin lever, comparing the potential impact to labor scheduling improvements the company made over the past two years, which added roughly 300 basis points.

BofA outlined five areas of opportunity, including supplier diversification, geographic diversification, product optimization, transportation and logistics, and technology deployment.

While beef represents a higher share of Shake Shack’s cost of goods sold than peers — around 30% — the analysts said supply chain savings should moderate the inflation impact, keeping costs of goods sold (COGS) inflation in the low single digits versus mid-single digits for the underlying inputs.

On unit growth, BofA said it believes Shake Shack can sustain a mid-teens net restaurant growth rate for at least the next five years. After slowing company-operated openings to 12% in 2024, when it closed nine underperforming stores, the chain grew its domestic base 13% in 2025 and is targeting roughly 15% growth, or 55 to 60 net new stores, in 2026.

BofA assumes Shake Shack grows its domestic store base at a 15% CAGR to reach 884 stores by 2031, with average unit volumes increasing at a 2% CAGR and restaurant-level margins expanding to 22.8%.

BofA also raised its fiscal 2026 adjusted EPS estimate to $1.59 from $1.41 and its 2027 estimate to $1.94 from $1.63.

Despite the upgrade, the analysts maintained a cautious tone overall. "Our Neutral rating is based on our view that the operating backdrop will remain challenging — with pressures on consumer spending and heightened value competition," they wrote, adding that Shake Shack’s initiatives should help sustain in-line same-store sales and earnings growth.