Barclays On Shake Shack: 'Growth And Valuation (Still) Unmatched'

In a report published Thursday, Barclays analysts maintained an Equal-Weight rating on Shake Shack Inc SHAK, while raising the price target from $40 to $42. Shake Shack announced its first full-quarter results as a public company, with adjusted EPS at $0.04, ahead of expectations. The company raised its 2015 revenue guidance from $159-$163m to $161-$165m, representing 36-39 percent y/y growth. The analysts believe that the revenue guidance is still conservative. In the report Barclays noted, "While 1Q15 comp was up 11.7%, guidance is prudently cautious, assuming comps ease post the Madison Square Park store re-opening, the rollover of its successful LTO, and the ultimate lap of crinkle cut fries & pricing. Otherwise, the focus is on restaurant margin, with pricing currently at ~6%, mitigating pressure relative to both food (up MSD led by beef) & labor cost inflation." The EPS estimates for 2015 and 2016 have been raised from $0.09 to $0.18E and from $0.12 to $0.24, respectively. The company's share price has surged 225 percent since its IPO on January 30, 2015. This compares with a 4 percent rise in the S&P.
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