Front-month implied volatilities are low on INTU stock options
Shares of Intuit Inc. (NASDAQ:INTU) came within striking distance of hitting a new record high earlier, after Stifel raised its rating on the Turbo Tax firm to "buy" from "hold," and boosted its price target to $240 from $197. After topping out at an intraday peak of $210.07 earlier -- not far from its June 15 all-time peak of $210.19 -- INTU was last seen down 0.1% at $209.04 amid broad-market headwinds.
The earlier upside price action just echoes the equity's longer-term trend, with Intuit stock up 48% year-over-year -- guided higher by its 80- and 120-day moving averages. And data from Schaeffer's Senior Quantitative Analyst Rocky White suggests the security just sent up a reliable buy signal, suggesting it could be time to bet on more short-term gains for INTU.
Specifically, the equity's Schaeffer's Volatility Index (SVI) of 19.3% ranks in the 20th percentile of its annual range. Not only does this indicate short-term options are relatively cheap, from a volatility perspective, but in the last five times INTU stock has been trading within 2% of a 52-week high while near-term volatility was so low, it averaged a one-month gain of 5.41%, with every single return positive. Based on its current perch, another move of this magnitude would put Intuit shares above $220 for the first time ever.
More bullish brokerage notes could certainly help keep the wind at INTU's back. At last night's close, the majority of analysts covering Intuit maintained a "hold" or "sell" recommendation. Plus, the average 12-month price target stands at $196.88 -- well below present trading levels.