Market Overview

Short Sellers Gang Up On Marvell Technology (MRVL, QCOM, STM)

Among the leading semiconductor stocks, Marvell Technology (NASDAQ: MRVL), Qualcomm (NASDAQ: QCOM) and STMicroelectronics (NYSE: STM) saw the most significant rises in short interest between the July 31 and August 15 settlement dates.

The number of shares sold short in LSI (NASDAQ: LSI), Micron Technology (NASDAQ: MU) and Texas Instruments (NASDAQ: TXN) also grew somewhat during that period.

Short interest in Intel (NASDAQ: INTC) was pretty much the same as in the previous period.

However, short sellers retreated from Advanced Micro Devices (NYSE: AMD), Applied Materials (NASDAQ: AMAT), ARM Holdings (NASDAQ: ARMH), Broadcom (NASDAQ: BRCM), KLA-Tencor (NASDAQ: KLAC) and NVIDIA (NASDAQ: NVDA) in early August.

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

Marvell Technology

Short interest in this Bermuda-based company was more than 56 percent higher than in the previous period to more than 8.97 million shares. That was the highest number of shares sold short so far this year, and it represented more than two percent of the total float. Days to cover was less than two.

This integrated circuits maker has a market capitalization of near $6 billion and a dividend yield near 2.0 percent. It was both upgraded and downgraded during the period. The long-term earnings per share (EPS) growth forecast is about 10 percent. The operating margin is better than the industry average.

For at least three months, the consensus recommendation of analysts surveyed by Thomson/First Call has been to hold Marvell Technology shares. The mean price target indicates more than 10 percent potential upside, relative to the current share price. However, that consensus target is less than the 52-week high.

Shares are trading in the same neighborhood as a month ago after pulling back about 10 percent this week. Over the past six months, the stock has outperformed the likes of LSI and Texas Instruments, as well as the Nasdaq and the S&P 500.

Qualcomm

Short interest in this San Diego-based company swelled about 16 percent to 20.23 million shares in early August. That is the largest number of shares sold short since last November, and it represents more than one percent of the float. Days to cover was the highest so far this year, but still less than two.

During the period, the CEO forecast double-digit smartphone growth. Qualcomm has a market cap of more than $113 billion and a dividend yield near 2.1 percent. The long-term EPS growth forecast of this S&P 500 component is more than 16 percent and the return on equity is more than 18 percent.

Of the 43 analysts surveyed, 12 rate the stock at Strong Buy, and another 21 also recommend buying shares. They believe the shares have some room to grow, as their mean price target is more than 10 percent higher than the current share price. That would be a level the shares have not seen since 2000.

Shares are trading less than four percent higher a month ago, and the share price is up by a similar amount from the beginning of the year. Over the past six months, the stock has outperformed Broadcom but underperformed Texas Instruments and the broader markets.

See also: Qualcomm Reports Deal to Sell North, Latin American Transportation, Logistics Unit to Vista Equity

STMicroelectronics

Short interest in this Swiss integrated circuits maker grew more than 15 percent in the first two weeks of August to more than 3.39 million shares, or almost double the number of shares sold a month earlier. Note that the days to cover jumped from less than two to less than seven during the period.

During the period, the company announced changes to its executive management following the spit-up of ST-Ericsson. The company has a market cap of more than $7 billion and a dividend yield near 3.9 percent. Note that the return on equity and the operating margin are both in negative territory.

The consensus recommendation of the six polled analysts is to buy STMicroelectronics shares, and it has been for at least three months. The mean price target is about 23 percent higher than the current share price. That target would be a new multiyear high.

The share price has pulled back about three percent in the past few days, but it is more than 14 percent higher year-to-date. Over the past six months, the stock has underperformed larger competitor Texas Instruments, as well as the Nasdaq and S&P 500.

See also: STMicroelectronics Announces Changes In Executive Management

At the time of this writing, the author had no position in the mentioned equities.

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