If you’ve ever walked past (or waited in line at) a Midtown Manhattan Shake Shack , you’ve likely seen the long lines that help explain why some analysts believe the company has so much growth opportunity left.
In fact, the chain’s brand is so strong that you might be forgiven for thinking that there far more than the 100 Shake Shacks currently in the U.S. (In-N-Out Burger, to pick one example somewhat at random, has many more in California alone.)
Morgan Stanley upgraded Shake Shack today, helping its shares become among the biggest gainers in the Barron’s Next 50. They were up nearly 8% Thursday morning after the upgrade, which could be boiled down to:
• The company keeps accelerating its expansion plans—and new stores are performing well, suggesting that cannibalization isn’t a concern yet.
• There’s room for some 450 U.S. stores—and then there’s international growth.
• The brand, including its connection to well-known chef Danny Meyer, has plenty of value that helps as the company moves into new markets.
Growing pains are inevitable. Future stores aren’t guaranteed to perform like the latest group has. But for now, the analysts say, “our long-term optimism for the brand remains strong.”