EAT Stock Price Target Lifted Before Earnings

Call buying has picked up on EAT stock in recent weeks

by Josh Selway

Published on Aug 12, 2019 at 9:54 AM
Updated on Jun 24, 2020 at 10:16 AM

Restaurant stock Brinker International, Inc. (NYSE:EAT) has been underwhelming on the charts this year, giving back more than 9% in 2019. However, Evercore ISI came in this morning with a bull note, raising its price target to $42 from $40. The brokerage firm said same-store sales is the number to watch for the Chili's owner, adding that the company's DoorDash partnership could drive upside for the shares.

The bullish attention comes ahead of the company's earnings release tomorrow, Aug. 13, before the open. The stock has closed lower the day after earnings in the previous two quarters, and if you go back two years, it's averaged a post-earnings swing of 4.3%. This time around, options traders are pricing in a bigger move of 7.6%.

And it would seem that the expectation from speculators is that this move will be to the upside, since call buying has been unusually popular in recent weeks at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The 10-day call/put volume ratio at the these exchanges is 11.67, ranking in the 92nd annual percentile. However, this could be connected to the high short interest levels on EAT stock, as there are 13.5 million shares dedicated to short interest -- so some of these bears could be using long calls to hedge.

Either way, Brinker shares will need to overcome recent pressure from the 80-day moving average in able to hit Evercore's price target. Most other analysts have taken a more skeptical approach, with just 25% of covering firms recommending to buy the shares. EAT was last seen trading at $40.03.


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