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Shake Shack Shares Reflect Domestic Growth Prospects After Mixed Q1 Results, Wedbush Says

05/07/2021 10:30

02:22 PM EDT, 05/07/2021 (MT Newswires) -- Shake Shack's (SHAK) share price has fully priced in the burgers chain operator's long-term domestic growth prospects following its mixed Q1 performance, Wedbush analysts said Friday.

Management reiterated unit growth guidance of 35 to 40 domestic co-owned openings this year, with 45 to 50 openings planned for next year, according to the report. Wedbush expects the company's addressable market to expand from management's pre-COVID target of 450 domestic company units.

Wedbush models 40 domestic openings in 2021 and 50 in 2022.

Late on Thursday, the company reported below-consensus revenue for Q1 while it surprisingly reported adjusted earnings.

Analysts Nick Setyan and Paul Hao said that the company's Q2 operating profit margin guidance of 15% to 17% was below market consensus of 20% and the brokerage's own estimate of 19.1% as the top line recovery in urban and higher volume locations lags.

The analysts kept their neutral rating while lowering their price target to $114 from $122.

Price: 90.14, Change: -15.48, Percent Change: -14.65