Boston Beer Stock Surges After Morgan Stanley Bull Note

The equity sports attractively priced premiums at the moment, too

Digital Content Manager
Mar 1, 2021 at 11:23 AM
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The shares of Boston Beer Company Inc (NYSE:SAM) are up 4.1% at $1,071.19 at last check, after Morgan Stanley initiated coverage on the security with an "overweight" rating and a $1,400 price target -- a roughly a 36% premium to Friday's close. Coming into today, the brokerage bunch was optimistic towards the Samuel Adams parent, with five of the nine analysts in coverage carrying a "buy" or better rating, while four said "hold" or worse. Plus, the 12-month consensus target price of $1,156.62 is an 8.1% premium to current levels. 

On the charts, the equity has been cooling off from a Feb. 17, all-time high of $1,236.57, after nearly tripling off its pre-pandemic levels around the $414 mark. Shares bounced off the 100-day moving average last week, but now the $1,100 level seems to be emerging as a potential area of resistance. Longer term, SAM carries an impressive 189.9% year-over-year lead. 

Short sellers are already hitting the exits, though there is plenty of pessimism left to be unwound. Short interest dropped 11.1% in the last two reporting periods, but the 610,000 shares sold short still make up 6.7% of the stock's available float, or over a weeks' worth of pent-up buying power.

Tailwinds could also come in the form of a shift in the options pits. This is per the equity's 10-day put/call volume ratio of 2.80 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 98% of readings from the past year. This means puts are being picked up at a faster-than-usual pace.

Lastly, SAM options can be bought at a discount at this time. The stock's Schaeffer's Volatility Index (SVI) of 44% sits higher than just 13% of all other readings in its annual range, suggesting options players are pricing in relatively low volatility expectations right now.

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