Shake Shack Inc (NYSE:SHAK), the gourmet burger chain, saw a lot of action on Friday as its stock price increased by 13.55% to close at $55.14. Interestingly, the stock was given a Market Perform rating by Cowen’s Andrew Charles, who set a price target of $42 after initiating coverage on Friday.

Since its IPO earlier this year, the stock has seen a significant surge from its offer price of $21. In May, the stock hit a peak when it touched $96.75. Since then, the stock’s price has cooled down somewhat.

Shake Shack’s latest earnings report had surpassed the expectations of Wall Street. In Q2 2015, the stock’s earnings per share (EPS) stood at $0.09, much higher than Street’s estimates of $0.03. During the quarter, the company saw a 75% increase in year-on-year sales growth and an increase of 4.5% in same-store sales growth.

As per Charles, investors are using the sales volumes of the first year as an indication of future performance. The premium valuation of the stock indicates that investor expectations may be very high.

Presently the company has 71 stores (or shacks as they call it) and has a long-term goal of 450 stores. In the US, the burger chain is present in 21 states, while internationally it has more than 20 stores, spread across the Middle East, Russia, Turkey and United Kingdom.

Among the company’s total annual store openings, one-third are in new markets, while two-thirds are in markets where it already has a presence. In this context, Charles has expressed worry that the company is left with very few high-profile markets to enter. However, the existing areas where foot traffic is lower are expected to develop as the concept sees further growth. Charles says, “Both of these factors should weigh on first year AUVs, leading to a declining ROI profile as the concept rapidly grows.”

According to the Cowen report, “As new openings skew to existing markets outside of Manhattan, we believe this is too early to conclude, especially given the significant decline in AUVs when SHAK entered high-profile new markets outside of Manhattan.”

The company, which calls itself the modern day “roadside” burger stand, started off as a hot dog cart in Manhattan. On Friday, the company announced the Carpetbagger burger, which is inspired by a classic dish of the 1950s (a thick steak with fried oysters). When compared to other burgers of the chain, which are priced in the range of $6 to $7, Carpetbagger burgers will be sold at $8.50.

According to TipRanks, Andrew Charles has an overall success rate of 100% in recommending stocks. When measured over a one-year horizon (since 2014), Andrew has given an average return per recommendation of 11.8%.

Out of five analysts polled by TipRanks within the past three months, three are neutral on Shake Shack and two are bearish. The average 12-month price target on the burger chain is $41.50, marking a 17.41% potential downside from current levels.

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