Market Overview

AMD, Texas Instruments See Short Interest Surge

The largest percentage upswings in short interest in semiconductor stocks between the March 28 and April 15 settlement dates happened to Advanced Micro Devices (NYSE: AMD), Applied Materials (NASDAQ: AMAT) and Texas Instruments (NASDAQ: TXN). All three jumped by double-digit percentages from the previous period.

The number of shares sold short in Broadcom (NASDAQ: BRCM), Marvell Technology (NASDAQ: MRVL), Micron Technology (NASDAQ: MU), Nvidia (NASDAQ: NVDA) and Qualcomm (NASDAQ: QCOM) also grew somewhat during that period.

But ARM Holdings (NASDAQ: ARMH), Intel (NASDAQ: INTC) and KLA-Tencor (NASDAQ: KLAC) saw declines in the number of shares sold short in the first weeks of April.

Advanced Micro Devices

This Sunnyvale, California-based company saw short interest pull back more than 10 percent in early April to 102.22 million shares. That was the largest number of shares sold short so far this year and represents about 17 percent of the float. But days to cover dropped to less than six.

AMD has targeted game consoles, including the next generation Xbox, to offset weakness in the PC market. The company has a market capitalization of about $2 billion but does not offer a dividend. The long-term earnings per share (EPS) growth forecast is less than three percent and the return on equity is in negative territory.

The consensus recommendation of analysts who follow the stock and were surveyed by Thomson/First Call has been to hold shares for the past three months. They believe the shares have a little head room, as their mean price target is more than five percent higher than the current share price. But that target is well short of the 52-week high.

The share price is about 64 percent lower than a year ago. Shares have been trading between $2 and $3 since December. But over the past six months, the stock has outperformed competitors Intel and Nvidia, as well as the broader markets.

Applied Materials

This equipment and services provider to the semiconductor industry saw short interest surge about 26 percent in early April to 18.95 million shares. That was the second largest number of shares sold short so far this year. The short interest is still less than two percent of the company's float.

Applied Materials said it remains committed to its solar business despite a slump. The company has a market cap of about $17 billion and a dividend yield near 3.1 percent. The long-term EPS growth forecast of this S&P 500 component is about nine percent. The operating margin is better than the industry average, but the return on equity is near zero.

Of the 17 surveyed analysts, just seven recommend buying shares. The mean price target, or where the analysts expect the share price to go, is less than four percent higher than the current share price. But that target is a level the share price has not seen since May of 2011.

The share price is more than 19 percent higher year to date, finally breaking through resistance at $14 today. The stock has outperformed the broader markets and competitor KLA-Tencor over the past six months.

Texas Instruments

Short interest in this Dallas-based company swelled more than 23 percent in the first two weeks of April to 28.17 million shares, reversing a three-period slide in the number of shares sold. That represented less than three percent of the float, though days to cover rose to about three for the first time this year.

During the period, Texas Instruments cut the ribbon on a new engineering lab in Berkeley, California. The company has a market cap of about $40 billion and a dividend yield near 3.3 percent. The long-term EPS growth forecast of this S&P 500 component is less than nine percent, and the return on equity is almost 17 percent.

The consensus recommendation of the analysts polled is to hold shares, and it has been for at least three months. But the share price has overrun their mean price target, which means on average they see no upside potential at this time.

The share price is almost 12 percent higher year-to-date and reached a 52-week high yesterday. Over the past six months, the stock has outperformed competitor Qualcomm, as well as the Nasdaq and S&P 500.

Posted-In: Advanced Micro Devices AMD applied materials ARM Holdings broadcom IntelShort Ideas Trading Ideas Best of Benzinga

 

Related Articles (AMAT + AMD)

Around the Web, We're Loving...

Get Benzinga's Newsletters