The shares of GrubHub Inc (NYSE:GRUB) are down 0.3% to trade at $80.56, as broad-market headwinds offset a Credit Suisse upgrade to "outperform" from "neutral" and a price-target hike to $130 from $125. The analyst in coverage waxed optimistic on the company's delivery network, market expansion, and new partnerships, and said the firm would "use any potential pullback to either increase on initiate a position on Grubhub shares."
Looking at the charts reveals GRUB's sharp sell-off from its Sept. 14 record high of $149.12 to its Dec. 24 10-month low of $66.70. However, GrubHub stock is up more than 20% from this recent bottom, and climbed above its 80-day moving average during last Friday's pop -- a former layer of resistance that could now switch to a more supportive role.
More bullish analyst attention could certainly be on the way, too, as 10 of 21 brokerages in coverage rated GRUB a "hold" or "strong sell" before today. And a short squeeze could also fuel a rally. Short interest increased by 5% in the last two reporting periods to 9.58 million shares, the most since June. This represents a healthy 12.2% of the stock's total available float, or a week's worth of pent-up buying power, at GrubHub's average pace of trading.
Sentiment in the options pits is overwhelmingly bearish, as well. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GRUB's 10-day put/call volume ratio of 2.86 ranks in the 97th annual percentile, meaning puts have been bought to open over calls at a healthier-than-usual pace in the last two weeks.
Drilling down, the February 70 put has seen the biggest increase in open interest over this two-week time frame, and data indicates some of these positions were bought to open. In other words, traders expect GRUB to sink back below $70 by front-month options expiration at the close on Friday, Feb. 15. This period includes GrubHub's fourth-quarter earnings report, due before the open on Thursday, Feb. 7.