Analysts Move on From Overbought Texas Roadhouse Stock

Most analysts already had the equivalent of a "hold" rating on the stock

Sep 10, 2018 at 10:14 AM
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Last Thursday, brokerage firm Baird hiked its price target on Texas Roadhouse Inc (NASDAQ:TXRH) to $75 from $68, only to watch the stock surge the next two sessions to post an all-time closing best of $75.17 on Friday. Overall, TXRH shares added more than 9% last week, and Baird is already adjusting its outlook again following this quick rise, this morning lowering its rating to "neutral" from "outperform."

The firm wasn't alone, however, with Wedbush also downgrading the equity to "neutral" from "outperform." These new ratings match the general consensus across Wall Street, where nine of the 17 brokerage firms in coverage have "hold" ratings in place.

Texas Roadhouse shares may have been due for a breather anyways, since their 14-day Relative Strength Index (RSI) was all the way up at 85 at Friday's close, deep into overbought territory. So far today, the stock has dipped 3.4% to trade at $72.61. Even with this pullback, TXRH sports a year-to-date lead of roughly 38%.

Meanwhile, short interest on the restaurant name has been elevated for some time, so these bears are getting at least a little relief today. By the numbers, almost 6% of the stock's total float is sold short, equating to 6.3 days' worth of buying power, going by average daily volumes.

For any prospective options traders, near-term contracts appear well-priced at the moment, from a volatility standpoint. This is based off the stock's Schaeffer's Volatility Index (SVI) of 24%, which ranks in the low 15th annual percentile.

 

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