Analysts Fazed By Shacke Shack Inc. Stock Price

Shake Shack Inc. SHAK traded sharply lower Thursday after a less-than-sterling earnings report, but analysts remained fazed by the stock's sky-high price. Shares of the high-end burger chain fell more than 3 percent to $45.32 recently. "The traditional valuation is at levels we've never seen," said Barclays' Jeffrey A. Bernstein, who maintained an Equal Weight rating and $40 target. Jeffries' Andrew Barish said Shake Shack's valuation is "at an all-time restaurant high" and maintained a Hold rating and $40 target. The company's stock price "represents a near-term impediment" according to Morgan Stanley's John Glass, with an Equal Weight rating and $38 price objective. Shake Shack, which raised $150 million in a January initial public offering, has since seen its shares more than double in value. Apart from skepticism on Shake Shack's stock price, analysts generally applauded its performance so far. "It was a strong inaugural quarter," Glass said, noting higher-than-expected same-store sales growth of 7.2 percent and five new locations. The company, currently with 63 stores, including 31 in the U.S., expects to end up with about 450 units. That goal represents at "least another decade of expansion at a 20 percent growth clip," according to William Blair's Sharon Zackfia, who nonetheless maintained a Market Perform rating on the company, "given its rich valuation." Although Shake Shack's loss was wider than expected, revenue beat the consensus and Bernstein called its guidance "conservative." But while Bernstein said a relatively high price for Shack Shack shares appears justified, "the question is how high is too high?"