The Street Is Sweet On Hostess Brands

Hostess Brands, Inc. TWNK is in the midst of a remarkable turnaround, and analysts are finally beginning to take notice. Shares are up 28 percent since the company went public in mid November.

C.L. King: Strong Buy, $20 Price Target

Take C.L. King & Associates, which initiated coverage on the stock early this week with a Strong Buy and a $20 price target. The firm noted the lack of analyst coverage that currently surrounds the iconic brand.

C.L. King was so impressed with the restructuring that took place after the company emerged from Chapter 7 bankruptcy it declared it will one day be a Harvard Business School case study.

Deutsche Bank: Buy, $18 PT

Analysts at Deutsche Bank have followed suit, initiating coverage on Hostess with a Buy rating and a $18 price target. Deutsche Bank also called it as a Top Pick.

The German bank cited Hostess' willingness to expand into other categories, highest operating margins in its coverage and superb sales to FCF conversion as positive catalysts for the brand.

Related Link: Hostess Looking Like A Sweet Deal At Current Valuation

However, Short Interest Remains

Despite the increase in analyst coverage this week, the short interest in the stock remains high.

Between the January 13 and January 31 settlement dates, the bakery company saw the number of its shares short gain almost another 14 percent to about 4.30 million, ~5 percent of the float. The short interest has risen in seven of the past eight periods, and at the most recent average daily trading volume, it would take about four days to cover all short positions.

Hostess stock continued its run Wednesday, gaining 3 percent. At last check in Thursday's session, shares were up 1.11 percent at $15.43.