Credit Suisse Sees "Significant Hurdles" for Molson Coors Stock

TAP options traders have been unusually bullish in recent weeks

Jun 10, 2019 at 10:02 AM
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Molson Coors Brewing Co (NYSE:TAP) is down 3.2% at $55.14, after Credit Suisse initiated coverage on the stock own with an "underperform" rating and a $50 price target -- a discount to last Friday's close at $56.97. The brokerage firm said the beer maker faces "significant hurdles in overcoming its portfolio exposure," and that there's "no clear path to stabilization."

Analysts have been mixed toward the drink specialist, which has shed almost 13% since its late-April peak at $64.32. At last Friday's close, six of the 12 analysts covering TAP stock maintained a "strong buy" recommendation, compared to five "holds," and one "sell." Meanwhile, the average 12-month price target of $66.56 represents a 19.7% premium to current trading levels.

Options traders, on the other hand, have shown an unusual bullish bias toward the stock in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Molson Coors' 10-day call/put volume ratio of 2.32 ranks in the 70th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

Data from Trade-Alert shows the weekly 6/28 56.50-strike call has seen the biggest increase in open interest over this two-week time frame, with those who bought to open the options betting the stock will settle the month above $56.50. Looking closer at the charts, the stock is now testing its year-to-date breakeven mark at $56.16, with recent resistance emerging at its descending 20-day moving average, currently located at $57.49.

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