Short Interest Is Surging In These Three Semiconductor Stocks
- While short interest in semiconductor stocks was mixed in early September, upswings were stronger than downswings.
- Short sellers piled on Analog Devices, Freescale Semiconductor and Qorvo in particular during that time.
- Other chip stocks with surging short interest included Texas Instruments, but it was flat in Intel.
While short interest was mixed in the leading semiconductor-related stocks between the August 31 and September 15 settlement dates, for the most part upswings were stronger than downswings.
That was particularly evident in Analog Devices, Inc. (NASDAQ: ADI), Freescale Semiconductor Ltd (NYSE: FSL) and Qorvo Inc (NASDAQ: QRVO), which saw surges in the numbers of their shares short in the first two weeks of the month.
Below we take a closer look at how these three stocks have fared recently and what analysts expect from them. That is followed by a glance at the short interest moves in other key chip stocks.
Short interest in this integrated circuits maker jumped more than 39 percent during the period to more than 7.02 million shares. That was the greatest number of shares sold short since April, and it represents more than 2 percent of the float. The days to cover rose to more than two.
The market capitalization is about $17 billion, with a dividend yield near 2.9 percent. Analog Devices is seen as one of the best positioned to benefit from trends in the automotive industry.
The consensus recommendation of analysts surveyed by Thomson/First Call recently shifted from holding shares to buying them. Their mean price target suggests there is more than 19 percent upside in the stock over the next year.
The share price rose more than 7 percent during the first two weeks of September, compared to a gain of less than 4 percent for the Nasdaq. Over the past six months, the stock has outperformed larger competitors NXP Semiconductors and Texas Instruments.
The number of shares sold short in this Austin, Texas-based company surged more than 43 percent to almost 4.39 million. That was nearly 4 percent of the float. Average daily volume dropped by more than half, and it would take more than three days to cover all short positions.
Freescale soon will be gobbled up by NXP Semconductors if all goes according to plan. Freescale has a market cap of more than $11 billion, and it is expected to help NXP shares double within five years.
Less than half of the analysts polled recommend buying the shares, though none rate the stock at Underperform. They believe shares have some head room though, as their mean price target is about 18 percent higher than the current share price.
Short sellers watched the share price rise more than 7 percent during the two-week period, though it has retreated 4 percent or so since. The stock has outperformed NXP Semiconductors, but it has underperformed the Nasdaq.
The 5.40 million shares short as of mid-month was about double the number of shares short at the end of July. That was more than 3 percent of the float of this radio frequency systems maker. As the average daily volume dropped, days to cover was more than two for the first time since May.
At least one analyst was positive on Qorvo and its peers during the short interest period. The North Carolina-based company has a market cap near $7 billion and an operating margin better than the industry average.
All but two of the 19 surveyed analysts recommend buying Qorvo shares, with six of them rating the stock at Strong Buy. A move to the mean price target would be a gain of more than 38 percent for the shares.
The share price ended the two-week period more than 3 percent lower, despite being up more than 8 percent at one point. The stock has underperformed the broader markets and peers Skyworks Solutions and Avago Technologies over the past six months.
The number of shares short in Applied Materials, Avago Technologies, Skyworks Solutions and Texas Instruments also swelled by double-digit percentages in the first weeks of September, while the short interest in Broadcom, Micron Technology and ON Semiconductor grew more modestly.
The short interest in Advanced Micro Devices, Intel and Linear Technology was essentially flat over the two weeks. But short sellers withdrew from Altera, Cypress Semiconductor, Maxim Integrated Products, Marvell Technology, NVIDIA, Qualcomm and Xilinx in the period.
At the time of this writing, the author had no position in the mentioned equities.
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