WSM has been on a tear, adding 38% over the past 12 months
Home retailer Williams-Sonoma, Inc. (NYSE:WSM) is enjoying a 1.3% lift this morning, last seen trading at $74.31 following an early-morning upgrade out of Oppenheimer. The analyst raised its rating to "outperform" from "perform," and established a price target of $90. This new outlook comes in 23% above WSM's Monday night close at $73.45. Coming into today, 17 of 19 covering brokerage firms carried a "hold" or worse recommendation, making today's bull note well overdue.
Since hitting an annual low of $50.14 on June 29, the shares of Williams-Sonoma have been on a tear, making its way to last week's Jan. 17, four-year peak of $77. This rapid recovery has been supported by both the 80- and 100-day moving averages, which have paved the way to the stock's now 38% year-over-year gain.
Although short interest rose just 5.8% during the past two reporting periods, this now accounts for 11% of the stock's total available float. At WSM's average pace of daily trading, it would take shorts almost nine days to buy back their bearish bets, hinting at plenty of buying power that's on the sidelines that could come in to push the shares higher.
Regardless of short-selling activity, now looks like an attractive time to buy premium on Williams-Sonoma options. The stock's Schaeffer's Volatility Index (SVI) of 27% arrives in the 12th percentile of its 12-month range, meaning short-term options have priced in lower volatility expectations just 12% of the time within the past year.