Credit Suisse Capitulates to Surging Starbucks Stock

Starbucks has picked up roughly 10% in the past three months

Managing Editor
Jan 18, 2018 at 10:29 AM
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Coffee concern Starbucks Corporation (NASDAQ:SBUX) is on the radar today, after the Seattle-based beverage chain received positive analyst attention ahead of its fiscal first-quarter earnings report, which is expected to drop a week from today, after the stock market closes. The note came from Credit Suisse, after the brokerage firm raised its price target to $57 from $54 on SBUX -- though this still stands at a discount to current levels.

Looking at the charts, Starbucks stock has seen impressive gains since its mid-August lows near $52.58, up more than 15%. In the past three months alone, SBUX has managed to pick up nearly 10% in the past quarter, climbing above its previously resistant 50-week moving average in the process.  At last check, Starbucks stock was trading 0.4% higher at $60.92.

Still, skepticism has shown its face in SBUX's options pits. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows Starbucks stock with a 10-day put/call volume ratio of 1.02, which ranks in the 92nd percentile of its annual range. This suggests puts have been purchased over calls at a faster-than-usual clip during the past two weeks.

The pessimism is seen outside of the options pits, too, where short interest rose 5.1% during the past two reporting periods. At SBUX's average daily trading volume, it would almost a week for shorts to cover their bearish bets, at the average pace of trading. A capitulation from bearish traders could create tailwinds for Starbucks shares.

 

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