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

• Wedbush Securities raises its rating on Shake Shack to outperform from neutral, citing improving earnings in the coming years.
• The firm increases its price target for the restaurant chain to $43 from $33, representing 17 percent upside from Wednesday's close.

A worker takes a pager from a customer at a Shake Shack restaurant in Bridgewater, New Jersey.

Ron Antonelli | Bloomberg | Getty Images

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."