Firstly, the stock is very illiquid as just 5.75 million of the total 37 million shares are floating.
Advertisement
Shake Shack, a food business that calls itself a “roadside burger stand”, is not finding much love in Wall Street after its stock has been downgraded by Morgan Stanley from an Equal Weight/Hold to an Underweight/Sell as the firm believes the stock is simply overpriced, Market Watch reports. SSE Holdings operates and licenses restaurants in the global restaurant industry, serving hamburgers, hot dogs, crinkle-cut fries, shakes, frozen custard, beer and wine. This means the total numbers of shares on Short position now account 42.6% of the total floating shares. The stock has been going up ever since, and by late May some wondered if it was headed for triple digits.
That’s important, because Shake Shack’s stock has been coming back to earth. 738,703 shares of the company’s stock traded hands. Since IPO the fast-casual retailer has grabbed many headlines by opening stores at high profile locations and attracting media attention, said the analyst. The company saw huge success after the offering of its IPO this past January.
The culprit was Morgan Stanley Analyst John Glass, who downgraded the chain’s shares to “underweight” and said that there is an “extreme disconnect” between the company’s fair value and its current market price. Since that time they have appreciated another 45% and are now 50% above our target and >15% above our bull case.
Advertisement
Despite the likely fanfare that will ensue, Morgan Stanley analysts don’t seem to care. The firm now has a $82.27 price objective on the stock. Analysts at Jefferies Group reiterated a hold rating and set a $60.00 price target on shares of Shake Shack in a research note on Monday, June 29th.
