Some bearish investors are beginning to turn on Shake Shack Inc (NYSE:SHAK) after the fast-casual burger chain captivated the media with its $29 IPO in January. Shake Shack shares initially sold faster than its burgers, more than doubling the stock’s price on its first day of trading.

Investors and consumers alike were excited about Shake Shack’s popular brand name, casual setting, and premium meat. Many equated the stock to Chipotle, which has seen exponential growth since it went public in 2006. However, Shake Shack seems to have leveled off after reaching an all-time high of $97, last closing at $55.

John Glass of Morgan Stanley was one of the few analysts to remain on the sidelines of Shake Shack from the start. He initiated coverage on the burger chain with an Equal Weight rating in late February, noting, “the dynamics of a small float are at work and we expect Shake Shack’s large, open-ended market opportunity to sustain valuation versus many other recent restaurant IPOs.”

Now, Glass sees a valuation problem with the stock. Yesterday on July 7, Glass downgraded Shake Shack from Equal Weight to Under Weight while maintaining his $38 price target, marking a potential 30% downside from where the stock is currently trading. Glass calculates his price target using a $25 bear case and a $50 bull case. Even so, the bull case assumes “[average unit volume] over time reaching close $7.5M and store margins near 30% – even after building out over 800 domestic units.”

Simply put, Shake Shack is expensive.  The analyst explains, “At [approximately] $59, Shake Shack trades at >15% premium to our upside case, which gives Shake Shack ample credit for exceeding its initial unit expansion and margin goals. While fundamentals near term are likely to remain strong, that outcome is likely already more than compensated for in current valuation.” Based on 2017 estimates, Glass explains, “Shake Shack trades at nearly 80x our EBITDA and a lofty 325x P/E. Its total market cap of over $2B implies Shake Shack trades at just under 9x 2017 revenue. This compares to a high growth peer average of 17x ’17 EBITDA and 65x P/E.”

Glass attributes Shake Shack’s high price tag to several factors. First, the illiquidity of shares, meaning shares cannot be easily or quickly sold without foregoing value. Glass explains that not all 37 million total shares are available for trading. Second, Glass notes there is “expensive ‘borrow’ and limited on stock, making it extremely difficult for investors to express a view on valuation by shorting the stock.” Glass notes that these two factors will be mitigated once the lockup expires at the end of the month and more shares become available on the market. Lastly, Shake Shack’s trendy brand, “high profile locations,” and “media attention surround the IPO process” all increased the hype of the stock.

John Glass has a 65% overall success rate recommending stocks over a 1-year horizon and no benchmark with a +13.8% average return per rating. He does not have an average return or success rate for Shake Shack specifically because he has only had one previous neutral rating on the stock.

Shake Shack Glass

According to TipRanks, Out of the six analysts who rated Shake Shack in the past 3 months, 6 are neutral on the stock and 1 is bearish. The average 12-month price target for SHAK is $46.67, marking nearly a 15% potential downside from where the stock is currently trading.