Market Overview

Applied Materials, Marvell Technology Face Rising Short Interest (AMAT, MRVL, STM)

Among the leading semiconductor stocks, Applied Materials (NASDAQ: AMAT), Marvell Technology (NASDAQ: MRVL) and STMicroelectronics (NYSE: STM) saw the most significant rises in short interest between the September 13 and September 30 settlement dates.

The number of shares sold short in Broadcom (NASDAQ: BRCM), Intel (NASDAQ: INTC), NVIDIA (NASDAQ: NVDA) and Qualcomm (NASDAQ: QCOM) also grew somewhat.

However, short sellers retreated from Advanced Micro Devices (NYSE: AMD), ARM Holdings (NASDAQ: ARMH), KLA-Tencor (NASDAQ: KLAC), LSI (NASDAQ: LSI), Micron Technology (NASDAQ: MU) and Texas Instruments (NASDAQ: TXN) in late September.

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

See also: Peabody Energy Again Bucks Short Interest Trend In Coal

Applied Materials

This equipment and services provider to the semiconductor industry saw short interest jump more than 34 percent in the period to around 21.20 million shares. That was the greatest number of shares sold short in at least a year. The short interest was almost two percent of the float.

Applied Materials announced in the period that it would acquire Tokyo Electron for $9.4 billion. The Santa Clara, California-based company has a market capitalization of more than $21 billion and a dividend yield near 2.3 percent. The long-term earnings per share (EPS) growth forecast of this S&P 500 component is about nine percent.

Half of the 20 analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, and 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 more than 12 percent higher than a month ago, and shares are trading near the 52-week. The stock has outperformed not only the Nasdaq over the past six months, but also competitors such as KLA-Tencor and Lam Research (NASDAQ: LRCX).

Marvell Technology

Short interest in this Bermuda-based company was about 14 percent greater than in the previous period to more than 13.41 million shares. That was the highest number of shares sold short in the past year, and more than double the number at the end of July. More than three percent of the float was sold short.

This integrated circuits maker lost a bid to toss out a $1.7 billion patent verdict during the period. It has a market cap of less than $6 billion and a dividend yield near 2.2 percent. The long-term EPS growth forecast is about 10 percent, but the return on equity is less than six percent.

For at least three months, the surveyed analysts' consensus recommendation has been to hold Marvell Technology shares. Yet the mean price target indicates more than 14 percent potential upside, relative to the current share price. But that consensus target is less than the 52-week high from back in August.

The share price has pulled back almost 11 percent in the past month, but it is still up more than 54 percent from the beginning of the year. Over the past six months, the stock has underperformed the likes of LSI, Texas Instruments and the Nasdaq, though it did outperform the S&P 500.

See also: Short Interest Still Rising In SolarCity, Falling In Advanced Energy

STMicroelectronics

Short interest in this Swiss integrated circuits maker grew about 18 percent in the final two weeks of September to more than 3.47 million shares. That took back most of the decline in the number of shares sold short in the previous period. The days to cover is less than three.

During the period, the company announced an upcoming "Extraordinary General Meeting of Shareholders." The company has a market cap of more than $8 billion and a dividend yield near 3.8 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 16 percent higher than the current share price. Shares have not traded at that level since May of 2011.

Shares are trading more than seven percent higher than a month ago, and the share price is more than 25 percent higher year-to-date. Over the past six months, the stock has outperformed larger competitor Texas Instruments and the S&P 500.

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

 

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