We won't really know how the new tax laws will impact restaurants or their workers for another 18 months at least, so we're going to argue that this analyst's note is as prescient as a coin flip.
— Jason Clampet
Shake Shack Inc. shares surged the most in a month after a restaurant analyst said that the recently passed tax reform package will be a boon for the burger chain.
The shares surged as much as 8.5 percent to $47.39 on Wednesday in New York, the biggest intraday gain since Dec. 7. The spike came after Jake Bartlett, an analyst at SunTrust Robinson Humphrey, raised his price target on the stock to $60.
Shake Shack, a volatile stock that trades with a small float and is heavily shorted, finished 2017 up 21 percent at $43.20.
In a research note, Bartlett said the tax reforms will help the broader restaurant industry, fueling same-store sales gains as consumers spend their savings eating out. The fast-food industry has been plagued by sluggish customer traffic, which has prompted intense competition on discounts and value meals.
Tax reform could help the industry break out of its price war, Bartlett said. He identified Shake Shake, Wendy’s Co. and Dave & Buster’s Entertainment Inc. as chains that could benefit the most and raised his price targets on all three stocks.
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