Shake Shack's Stock Slumps After Analyst Downgrades On Valuation Concerns

Shake Shack shares shed 3.4% in premarket trade Tuesday, after Stifel Nicolaus downgraded the burger chain, citing concerns over valuation. Analyst Paul Westra lowered his rating to hold from buy, but raised his fair value estimate on the stock to $55, which is 14% below Monday's closing price of $63.65, from $50. He said he remains confident in his bullish view about how the company operates in the socially-networked world, and its position as the industry's best "fine-casual" restaurant. "However, given the recent price appreciation of [Shake Shack] shares, we reduce our rating...based on valuation alone," Westra wrote in a note to clients. The stock has soared 36% since the company revealed its fourth-quarter report, its first as a public company, and has tripled since its initial public offering priced at $21 on Jan. 29.

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