BMO just upgraded Hershey stock to an "outperform"
Hershey Co (NYSE:HSY) is getting a sweet boost from BMO today, after the analyst upgraded the candy concern to "outperform" from "market perform" and hiked its price target to $163 from $150. The analyst called HSY a "compelling investment" adding that its short-term concerns over the cancellation of Halloween impacting its sales are likely overestimated, seeing as its seasonal sales for Easter exceeded expectations. At last check, HSY is up 0.9% at $141.72.
Now, HSY is going head-to-head with its 20-day moving average -- a previous region of support that the stock fell below in early September. While the equity's pullback from its six-month peak of $152.18 sent it careening back below its late-July post-earnings bull gap, it is once again bumping up against the $142 level, which acted at support in August. Longer term, the stock is down 3.4% year-to-date.
The majority of analysts haven't yet followed BMO's lead. In fact, just two in coverage called HSY a "strong buy" coming into today, compared to 10 "hold" ratings. Meanwhile, the 12-month consensus price target of $150.13 is a 6.1% premium to current levels.
Pessimism prevails in the options pits, too. During the past 10 days, an eyebrow-raising 7.24 puts were picked up for every call at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 98% of readings from the past year. Suggesting a healthier-than-usual appetite for long puts of late.
Echoing this, Hershey's Schaeffer's put/call open interest ratio (SOIR) of 1.37 stands in the 83rd percentile of its annual range. This suggests short-term option traders are unusually put-biased at the moment.
Regardless of which stance you've chosen to take on HSY, options look like the way to go. HSY's Schaeffer's Volatility Index of 23% stands higher than just 12% of readings in the past 12 months. This means options players are pricing in relatively low volatility expectations at the moment.