BJ's Restaurants Stock Lands Analyst Upgrade

Short interest has continued rising on BJRI stock

Oct 5, 2018 at 9:30 AM
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BJ's Restaurants, Inc. (NASDAQ:BJRI) is trading up 2% at $67.60, after Piper Jaffray upgraded the shares to "overweight" from "neutral" and moved their price target up $1 to $76. Interestingly, this price point swiftly rejected BJRI stock just a few weeks back, sending it down to its 80-day moving average for the first time since February -- though the security managed an all-time peak of $76.50 on Sept. 10.

Overall, the stock has been a huge winner over the past year, more than doubling in value. We highlighted all the way back in May of 2017 the potential for more upside given the skeptical outlook many have on the shares, and not much has changed since then on the sentiment front. In fact, short interest has continued to rise, now accounting for 21.6% of the float. It would take these bears more than seven sessions to cover, going by average daily volumes -- meaning a short squeeze is still in play.

What's more, eight of the 13 covering brokerage firms have "hold" or "strong sell" ratings, and the average 12-month price target of $69.73 prices in only a slim premium to BJRI's current price, representing levels seen just a few sessions back. The door remains wide open for additional bull notes to come through and keep the stock's rally alive.

As for options activity, the restaurant name is thinly traded, with only 96 calls and puts combined bought to open during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, it's still notable that BJ's Restaurants' Schaeffer's put/call open interest ratio (SOIR) is 2.13, showing put open interest doubles call open interest among near-term contracts. What's more, this ranks in the 100th annual percentile, showing such a put-skew is extremely rare.

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