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Goldman Sachs is really bullish on Shake Shack, sees 80% rally because of exclusive Grubhub deal

Customers pick up their orders from Shake Shack.
Andrew Burton | Getty Images

Shake Shack's exclusive partnership with Grubhub will ultimately be good for the fast-food chain, according to Goldman Sachs, which sees the restaurant's stock rallying 80% from here.

Goldman, which has a buy rating on Shake Shack, has a price target of $115 per share, while the fast-food company closed at $64.10 a share on Tuesday.

Management "commentary around the Grubhub migration was positive, as they indicated they completed the [positive] integration with GRUB," Goldman Sachs analyst Katherine Fogertey said in a note to clients on Tuesday, citing its meeting with Shake Shack management.

Shares of Shake Shack tanked about 14% in November after its third-quarter earnings report showed disappointing same-store sales growth. Revenue was in line with expectations, but same-store sales rose 2.0%, shy of the 2.5% growth analysts predicted. Some analysts attribute the weakness in comp sales to Shake Shack transitioning from four delivery partners, DoorDash, Postmates, Caviar and Grubhub, to just Grubhub in the third quarter. Goldman ultimately sees the exclusive partnership as a positive for Shake Shack.

"As part of the partnership, GRUB has provided SHAK with detailed customer data, as well as marketing resources such as loyalty and targeted promotions," said Fogertey.

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