Shake Shack Shares Boosted By Buckingham's Buy Rating

Shake Shack Inc SHAK received a boost on Thursday after Buckingham initiated coverage on the burger chain with a Buy rating and $45 price target.

Two of the main reasons for the Buy rating: Shake Shack has become a global brand in only a few years and has generated very strong sales growth.

"SHAK combines some of the best unit level metrics in the industry with one of the longest potential runways for growth," analyst John Zolidis wrote in a note. "We anticipate both near-term upside to analyst estimates and believe overall company EBITDA margins will experience upward pressure for years as the company achieves scale. We believe near-term upside will maintain the current valuation while the long-term potential for EBITDA margin expansion and growth justifies it."

The note continued, "We do acknowledge that investing in an early-stage company that is trading at high multiples on near-term results has a higher risk profile than other investments but we believe the longterm potential for this stock justifies being involved. We see 64% upside/43% downside in our best/worst case scenarios."

Shares traded up more than 5 percent to close at $36.71.