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Pro Analysis

Shake Shack to rally more than 15% on improving profits, Wedbush says

A worker takes a pager from a customer at a Shake Shack restaurant in Bridgewater, New Jersey.
Ron Antonelli | Bloomberg | Getty Images
A worker takes a pager from a customer at a Shake Shack restaurant in Bridgewater, New Jersey.

Investors should buy Shake Shack shares because the restaurant chain will report profits ahead of Wall Street expectations in the coming years, according to Wedbush Securities, which raised its rating on the company to outperform from neutral.

"We believe upside exists to current consensus EBITDA [earnings before interest, taxes, depreciation and amortization] estimates, driven by potential SSS [same-store sales] growth upside, new unit outperformance, and margin leverage ahead of expectations," analyst Nick Setyan wrote in a note to clients Thursday. "Given SHAK's industry-leading growth trajectory, we view valuation as attractive at current levels."