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
facebook twitter linkedin


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.

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Best stocks for October and worst stocks for October
 


 


 
Special Offers from Schaeffer's Trading Partners