Goldman Sachs thinks it is time to sell Shake Shack.

In a note to clients on Thursday, the firm downgraded its rating on the burger chain to Sell from Neutral, keeping its $US37 price target unchanged.

Over the last month, Shake Shack shares are down over 30%. Shares closed at $US51.60 on Wednesday.

In its note, Goldman cites 2 main factors in cutting its outlook for the stock:

1. The stock is expensive. Shake Shack still trades at 70x its projected profit over the next 12 months, which Goldman notes is “significantly higher” than its peers.
2. The IPO lockup expiration is coming. On July 29, the period following Shake Shack’s initial public offering in which company insiders couldn’t sell shares is expiring, and Goldman says that its research shows stocks typically underperforming in the weeks leading up and following this period.

On the plus side, Goldman thinks that Shake Shack is still only at 8% of its projected US company capacity, and the firms says there is still positive buzz around the company.

Looking at Google search trends, the firm says that interest around the company “has remained elevated, which we believe should support traffic growth.”

And so while Goldman still likes Shake Shack as a company over the long term, right now the stock is not attractive.

This downgrade makes Goldman just the latest firm to say that Shake Shack shares are too expensive, with Morgan Stanley earlier this week slashing its rating on Tuesday, sending shares of the company down about 10%.

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