Market Overview

Short Sellers Jump on KLA-Tencor, Marvell Technology (ARMH, KLAC, MRVL)

Among the semiconductor stocks, ARM Holdings (NASDAQ: ARMH), KLA-Tencor (NASDAQ: KLAC) and Marvell Technology (NASDAQ: MRVL) saw the most significant rise in short interest between the June 14 and June 28 settlement dates.

The number of shares sold short in Advanced Micro Devices (NYSE: AMD), Applied Materials (NASDAQ: AMAT), Broadcom (NASDAQ: BRCM), Intel (NASDAQ: INTC), Qualcomm (NASDAQ: QCOM) and Texas Instruments (NASDAQ: TXN) also grew somewhat during that period.

However, short sellers retreated from LSI (NASDAQ: LSI), Micron Technology (NASDAQ: MU), Nvidia (NASDAQ: NVDA) and STMicroelectronics (NYSE: STM) in late June.

Here we take a closer look at how ARM Holdings, KLA-Tencor and Marvell Technology have fared and what analysts expect from them.

ARM Holdings

The number of shares sold short in this multinational semiconductor and software design company rose more than 17 percent to about 5.17 million, the highest level of short interest since February. The short interest was about one percent of the float, and days to cover was about one.

This microprocessor designer has a market capitalization of more than $18 billion and a dividend yield of about 0.6 percent. It set a partnership deal with AMD during the period. ARM Holdings' return on equity is about 24 percent, and the long-term earnings per share (EPS) growth forecast is more than 22 percent.

Half of the 12 analysts polled by Thomson/First Call recommend buying ARM Holdings shares, while none recommend selling. The analysts' mean price target suggests more than 17 percent upside potential. But note that the consensus target is less than the multiyear high reached back in May.

The share price has risen about five percent in the past two weeks and is about two percent lower than at the beginning of the year. Over the past six months, the stock has underperformed competitors Applied Materials, Intel and Nvidia, as well as the broader markets.

KLA-Tencor

This maker of semiconductor and LED production equipment saw short interest jump more than 37 percent during the period to 5.30 million shares. That was the highest number of shares sold short since February. The short interest was more than three percent of the company's float.

KLA-Tencor is expected to post net income and revenue declines for the current quarter, but growth on the top and bottom lines in the next. The company has a market cap of almost $10 billion and a dividend yield near 2.8 percent. The long-term EPS growth forecast of this S&P 500 component is about 10 percent. The operating margin is better than the industry average, and the return on equity is more than 19 percent.

Of the 16 polled analysts, 11 recommend buying shares, while just one rates them at Underperform. The mean price target, or where the analysts expect the share price to go, is about the same as the current share price. The street-high price target suggests more than nine percent upside potential.

Note that shares reached a multiyear high today. The share price is more than 20 percent higher than six months ago. In that time, the stock has outperformed the broader markets, though it has underperformed competitor Applied Materials.

Marvell Technology

Short interest in this Bermuda-based company was more than 26 percent greater than in the previous period to more than 6.43 million shares. That was the second highest number of shares sold short so far this year, and it represented more than one percent of the company's float.

This integrated circuits maker has a market cap of more than $5 billion and a dividend yield near two percent. It also is expected to report declines in the top and bottom lines for the current quarter, but growth in the next. The long-term EPS growth forecast is about 10 percent.

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

The share price is more than seven percent higher than it was a month ago, and up more than 48 percent year-to-date. Over the past six months, the stock has outperformed the likes of LSI and Texas Instruments, as well as the broader markets.

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

 

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