Market Overview

Short Sellers Less Keen on Applied Materials, Marvell Technology (AMAT, NVDA, MRVL)

Among the semiconductor stocks, Nvidia (NASDAQ: NVDA) saw the most significant rise in short interest between the May 15 and May 31 settlement dates.

The number of shares sold short in Advanced Micro Devices (NYSE: AMD), KLA-Tencor (NASDAQ: KLAC) and Micron Technology (NASDAQ: MU) also grew somewhat during that period.

However, Applied Materials (NASDAQ: AMAT) and Marvell Technology (NASDAQ: MRVL) saw the largest percentage decreases in short interest.

Short sellers also shied away from ARM Holdings (NASDAQ: ARMH), Broadcom (NASDAQ: BRCM), Intel (NASDAQ: INTC), LSI (NASDAQ: LSI), Qualcomm (NASDAQ: QCOM), STMicroelectronics (NYSE: STM) and Texas Instruments (NASDAQ: TXN) somewhat during that time.

Here we take a closer look at how Applied Materials, Marvell Technology and Nvidia have fared and what analysts expect from them.

Applied Materials

This equipment and services provider to the semiconductor industry saw short interest decline more than 24 percent in late May to around 13.81 million shares. That was the smallest number of shares sold short since early in the year. The short interest was a little more than one percent of the float.

Applied Materials posted better-than-expected results in its most recent quarterly report. The company has a market capitalization of more than $18 billion and a dividend yield near 2.6 percent. The long-term earnings per share (EPS) growth forecast of this S&P 500 component is about nine percent, and the return on equity is in the red.

Half of the 18 analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, four of them rated the stock at Strong Buy. The mean price target, or where the analysts expect the share price to go, is less than the current share price, meaning analysts see no upside potential at this time.

The share price is almost 32 percent higher than at the beginning of the year, and it reached a 52-week high last week. The stock has outperformed the Nasdaq and competitor KLA-Tencor over the past six months.

Marvell Technology

Short interest in this Bermuda-based company was almost 24 percent lower than in the previous period to more than 4.79 million shares. That was the lowest number of shares sold short in at least a year, and it represented more than one percent of the total float. The average daily volume was the highest since February.

This integrated circuits maker has a market cap of more than $5 billion and a dividend yield near 2.2 percent. It also posted better-than-expected quarterly results. The long-term EPS growth forecast is about 10 percent. The operating margin is better than the industry average, and the price-to-earnings (P/E) ratio is lower than the industry average.

For at least three months, the surveyed analysts' consensus recommendation has been to hold Marvell Technology shares. The mean price target indicates about eight percent potential upside, relative to the current share price. However, that consensus target is less than the 52-week high from last August.

The share price is more than 49 percent higher than it was at the beginning of the year, but about the same as a month ago. Over the past six months, the stock has outperformed the likes of LSI and Texas Instruments, as well as the broader markets.

Nvidia

Short interest in this Santa Clara, California-based company surged more than 86 percent during the period to more than 59.06 million shares. That was more than double the number of shares sold short at the end of April, and it represents more than 10 percent of the float. Days to cover rose from about three in the previous period to more than six.

Nvidia is believed to be working with Google (NASDAQ: GOOG) on next-gen tablets and smartphones. Nvidia has a market cap of more than $8 billion and a dividend yield near 2.1 percent. The long-term EPS growth forecast of this S&P 500 component is more than 11 percent, and the P/E ratio is less than the industry average.

The consensus recommendation of the analysts polled is to hold shares, and it has been for at least three months. And their mean price target is only marginally higher than the current share price, as well as less than the recent 52-week high. Note though that the street-high price target suggests about 24 percent upside potential.

The share price is up about 13 percent year-to-date, despite pulling back a little in the past three weeks. The stock's performance has been in line with the broader markets over the past six months. It also outperformed competitor Qualcomm but underperformed Intel in that time.

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

 

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