RBC Capital Markets Flags Shake Shack as a Turnaround Play After 50% Decline from highs

RBC Capital Markets initiated coverage of Shake Shack with an outperform rating and a $89 price target, implying roughly 28% upside from Friday’s close. Analyst Logan Reich described the stock as sitting at an inflection point, noting that greater scale and a more sophisticated marketing and supply chain strategy could drive earnings above Street estimates through at least 2027.

Reich also highlighted a shift under the new CFO, who has eliminated quarterly guidance and may adopt more conservative expectations, potentially setting the stage for more consistent beats. RBC models same-store sales growth of 3.1% in 2027 versus the Street consensus of 2.2%, along with expanding margins in 2027 and 2027, primarily supported by easing beef costs.

If beef prices hold near current levels off their late-June highs, inflation in that category could turn flat or negative by mid-2027, the analyst added. With shares trading at roughly 11x consensus 2027 EBITDA—near a historical trough—Reich sees room for valuation expansion. His $89 target assumes 14.5x EV/FY27E EBITDA, versus high-teens multiples for fast-casual peers.

Among 28 analysts covering the stock, 15 rate it a buy or strong buy, according to LSEG.

Source link