Shake Shack Shares Sink on Analyst Downgrade

There's been a bearish bias in the options pits, too

Managing Editor
Apr 17, 2019 at 10:50 AM
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Burger giant Shake Shack Inc (NYSE:SHAK) is down 3% at $57.69, after Longbow Research downgraded the stock to "neutral" from "buy," saying the equity's gains since November are "modest" relative to the company's fourth-quarter same-store sales beat. This is offsetting a price-target hike to $60 from $54 at Wedbush, though the new target is in line with last night's close.

On the charts Shake Shack stock has been moving higher this year, up 27% since its Dec. 31 close, with support stemming from its rising 30-day moving average. Plus, the $57 level recently emerged as a floor, and roughly coincides with the security's 20-day trendline.

Amid light absolute volume, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows SHAK's 10-day put/call volume ratio at 2.05, which registers in the 88th annual percentile. This suggests puts have been bought to open over calls at a faster-than-usual clip.

This skepticism is seen elsewhere, too. Short interest rose 4.8% during the past two reporting periods, and now accounts for a healthy 19.6% of the stock's total available float. At SHAK's average pace of trading, it would take over nine days for shorts to cover their bearish bets.

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