Shake Shack's surging stock this year is an opportunity for investors to take some profit, according to J.P. Morgan.
The firm lowered its rating on the burger chain's stock to underweight from neutral, citing the company's valuation.
Shake Shack shares rose 18 percent Friday, a day after it reported stronger-than-expected first-quarter earnings.
"SHAK is currently a simple valuation driven exercise and even as we maintain the highest praise for management, the brand, and continued industry leading growth, in the spirit of J.P. Morgan's balanced ratings system, we are downgrading shares to Underweight as we do not have enough valuation support for a different rating," analyst John Ivankoe wrote in a note to clients Monday.
Shake Shack's stock is outperforming the market this year. It is up 29.5 percent through Friday versus the S&P 500's roughly flat return.
The company's stock traded up 0.6 percent on Monday.
Ivankoe raised his price target to $49, which is 12 percent lower than Friday's closing price. His old target was $40.
The analyst predicts the company will not lower its operating expenses anytime soon.
"Based on company commentary a large reduction in G&A [general and administrative expense] seems unlikely in the near term," he wrote.
Shake Shack did not immediately respond to a request for comment.
— CNBC's Michael Bloom contributed to this story.