In a report published Tuesday, Longbow Research analyst Aton Stump maintained a Neutral rating on Shake Shack Inc SHAK due to valuation concerns.
Shake Shack reported robust Q2 results, with the EBITDA ahead of the estimate and the consensus expectations. The company's comparable sales for 2Q15 were up 12.9 percent, meaningfully higher than the estimate.
"Shake Shack's impressive reported comparable sales growth in 2Q15 provides some further evidence that restaurant industry traffic trends are picking up behind an improved spending power environment," Stump mentioned.
The company raised the consolidated revenue guidance for 2015 from $161-$165 million to $171-$174 million, besides guiding to mid to high single-digit comparable sales growth, up from the earlier guided low to mid single-digit growth. Shake Shack also guided to 12 domestic company-owned new store openings, up from the earlier guidance of at least ten.
The guidance for opening at least five licensed international restaurants in the UK and the Middle East was kept unchanged.
In the report, Longbow Research mentioned, "While we still have concerns related to the valuation carried by SHAK, the company's impressive comp acceleration reported over the last three quarters could set the stage for further comp upside in coming quarters driven in large part by incremental rate pricing/mix."
The EBITDA estimates for FY15 and FY16 have been raised from $13.6 million to $27.1 million and $19.9 million to $39.6 million, respectively.
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