Shake Shack is trading at a discount investors can't ignore following an earnings-driven sell-off, according to Stifel. The investment firm upgraded the fast casual chain to buy from hold. It lowered its price target to $85 from $105, but that still implies 23% upside from Thursday's close. Shares tumbled 28% on Thursday after the company said it broke even for the first quarter on a per-share basis. Analysts polled by FactSet expect a profit of 12 cents per share. Same-store sales, a key metric for restaurant chains, was also just shy of expectations in the quarter. "The market has overreacted to disappointing 1Q earnings and soft April sales," analyst Chris O'Cull said in a note. "While restaurant margins have improved, we see an opportunity for meaningful EBIT margin expansion beyond our 2026 projection of ~4%, driven by significant G & A leverage (which management has promised), supporting more robust [free cash flow] generation." The results drove the stock to its lowest levels since early 2024. O'Cull added that, at roughly 12.5 times forward EBITDA, the stock is the cheapest it's been since the Covid-19 pandemic. SHAK 1D mountain Shake Shack's shares fell 28% on Thursday following its first-quarter earnings report. However, Shake Shack is poised to gain ground on its core value offering, or its $1-$3-$5 promotion, while its new menus and continued marketing investments should also drive more traffic to its stores, O'Cull noted. Stifel's call falls in line with consensus on the Street. Of the 30 analysts covering Shake Shack, 18 have a buy or strong buy on the stock, LSEG data shows. Shares have fallen nearly 15% in the year to date, underperforming the overall market.
