Shake Shack says Chick’n Bites weighed on results but analysts are concerned about the move to Grubhub

Shake Shack Inc. SHAK, -12.85% said adding Chick’n Bites, its version of chicken nuggets, to the core menu came with a headwind that eased at the back end of the year. In addition, it was the focus of the company’s menu innovation for 2019, which Shake Shack says contributed to a traffic decline. Shake Shack shares are down 12.6% in Tuesday trading after it reported a fourth-quarter loss and sales miss. However, analysts are focused on the shift to a single delivery partner, Grubhub Inc. GRUB, -2.71%, which Shake Shack has said previously will cause "volatility." "The current disruption is weighing on the results, but the magnitude and duration of the pressure remains TBD," wrote MKM Partners in a note. MKM rates Shake Shack shares neutral with a $70 price target, up from $65. "Significant challenges remain as key markets, such as California, have yet to transition to GrubHub exclusivity, and we believe there is risk the company will struggle to alter consumer behavior away from regional favorites like Postmates and DoorDash," wrote Stifel analysts. Stifel rates Shake Shack stock hold with a $60 price target. And SunTrust Robinson Humphrey analysts are concerned about cannibalization as Shake Shack expands, a concern that has come up previously. SunTrust rates Shack Shack shares hold with a $71 price target, down from $79. Shake Shack stock has gained nearly 23% over the past year while the S&P 500 index SPX, -1.07% is up 14.3% for the period.

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