Beer Stock Down as New CEO Search Gets Underway

Calls have been popular in recent weeks, and are affordably priced

Deputy Editor
Sep 8, 2020 at 9:51 AM
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The shares of Anheuser-Busch Inbev NV (NYSE:BUD) are down 3.4% to trade at $56.49 this morning, after the it was announced the company is looking for a new CEO to replace Carlos Brito. Brito has been at the helm of the beer company for 16 years, and plans to step down sometime next year.

On the charts, Anheuser-Busch stock is up 18.5% this quarter, but the momentum appears to have stalled below the $60 level, with its 200-day moving average also sitting just above. Nevertheless, BUD still has a solid layer of support in place in the form of its ascending 40-day moving average -- a trendline that acted as resistance during the equity's mid-March plunge. Year-over-year, the equity has taken a 40.5% haircut.

Analysts are divided on the beermaker, with just two of the five in coverage sporting a "buy" or better rating. However, the consensus 12-month target price of $63.57 is a 12.3% premium to current levels, suggesting there may be room for bear notes in the near future.  

In the options pits, calls have held the advantage in recent weeks. This is per the stock's 10-day call/put volume ratio of 4.63 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which indicates over 4 calls have been purchased for every put on BUD during the past two weeks.

Options are an intriguing route. The stock's Schaeffer's Volatility Index (SVI) of 36% is higher than just 18% of its annual readings, implying option players are pricing in relatively low volatility expectations at present. Additionally, BUD's Schaeffer's Volatility Scorecard (SVS) ranks at an 91 out of 100. This means the equity has tended to exceed these expectations during the past year -- a good thing for option buyers. 

 

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