"We believe Street expectations for 2020/2021 seem overly optimistic and create further downside risk from still elevated valuation levels (2020 EV/EBITDA ~26x)," warns analyst Brian Vaccaro.
Vaccaro says earnings concerns outweigh the firm's generally constructive view of the Shake Shack concept and its long-term growth prospects and thinks investors may be presented with a better entry point over the next few quarters as expectations further reset.
Vaccaro and team arrive at a price target of $47 on Shake Shack based off a five-year scenario analysis that applies a range of EV/EBITDA multiples discounted back to today. RJ's price target reps over 20% downside potential for SHAK and is well-below the average sell-side PT of $75.00.
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