WING's steady climb has sent short sellers scurrying
Wingstop Inc (NASDAQ:WING) stock is up 2.3% to trade at $73.43, responding positively to BMO initiating coverage on the restaurant chain with an "outperform" rating and $85 price target. The analyst spoke glowingly about the company, calling it a "unicorn" due to a "combination of long-tailed unit growth and superior operating/growth metrics."
Wingstop stock nabbed a record high of $73.97 on March 22, and now boasts a 12-month gain of over 58%. During this time frame, pullbacks in August, December, and February were all contained by the shares' ascending 160-day moving average.
A short squeeze is likely fueling this recent rally. Short interest fell by 2.6% in the most recent reporting period to 3.90 million shares. However, this accounts for a healthy 13% of WING's total available float, and more than a week's worth of pent-up buying power, at the security's average pace of trading.
Despite the equity's steady rise on the charts, analysts have been skeptical to come forward with bull notes, with five of the 11 brokerages covering WING rating it a "hold" or "sell." And while BMO's price target represents significant upside to the record high, the security's consensus 12-month price target of $70.17 is a 2% discount to last night's closing perch of $71.76.
Although volume tends to run light, options traders should note that premiums are attractively priced at the moment. Specifically, WING's Schaeffer's Volatility Index (SVI) of 31% ranks in the 8th percentile of its annual range. In other words, near-term options are pricing in relatively low volatility expectations.