Shake Shack surged Wednesday after a Goldman Sachs analyst reiterated her buy rating on shares of the restaurant chain and her $115 price target.
Shares were up 8.9% to $69.80.
Analyst Katherine Fogertey said in a note to investors that she was feeling comfortable about the company after a presentation by CEO Randy Garutti and Chief Financial Officer and President Tara Comonte at the 22 Annual ICR Conference.
"While they did not provide explicit financial updates," she said, "we walked away from their presentation with more comfort around the potential for menu innovation (return of the Hot Chicken Sandwich, and new hot chicken nuggets, as well as vegetarian burgers) to drive better than expected comps in 2020."
Fogertey said Garutti's and Comonte's comments around the Grubhub migration was positive. While the two executives said Shake Shack has completed the point of sale integration of Grubhub, "they have only migrated to just Grubhub as the sole third-party provider in 40% of stores. "
"This means that 60% of their restaurants still have at least one other, and potentially more, third-party delivery companies still integrated into their POS," she wrote. "Shake Shack plans to remove the other aggregators from their platform overtime. However, even after that happens, we see a strong case for the other aggregators to still offer SHAK delivery."
Fogertey said that Shake Shack has historically provided very little color on the extent of the sales that come from delivery channels and that come through digital.
"However, they did guide to traffic down 4% in 4Q19, with a large portion of this disruption likely to come from migrating to just GRUB integrated into POS," she wrote.