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Qualcomm Bucks Short Interest Trend (AMAT, MU, QCOM)

December 12, 2013 10:59 am
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While short interest in most of the leading semiconductor stocks declined between the November 15 and November 29 settlement dates, Applied Materials (NASDAQ: AMAT), Micron Technology (NASDAQ: MU) and Qualcomm (NASDAQ: QCOM) bucked the trend.

Short sellers retreated from Advanced Micro Devices, ARM Holdings, Broadcom, Intel, KLA-Tencor, LSI, Marvell Technology, NVIDIA, STMicroelectronics and Texas Instruments in late November.

Below we take a closer look at how Applied Materials, Micron Technology and Qualcomm have fared and what analysts expect from them.

See also: Short Interest In Solar Stocks Is Mixed

Applied Materials

This equipment and services provider to the semiconductor industry saw short interest rise less than eight percent in the period to around 35.22 million shares. That was the greatest number of shares sold short in at least a year. The short interest was about three percent of the float at the end of the month.

Applied Materials posted better-than-expected quarterly results in mid-November. The Santa Clara, California-based company has a market capitalization of more than $20 billion and a dividend yield near 2.4 percent. The long-term earnings per share (EPS) growth forecast of this S&P 500 component is about eight 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 about 10 percent higher than the current share price.

The share price has retreated more than four percent in the past month, but shares are still up more than 42 percent year to date. Because of the pullback, the stock has underperformed not only the Nasdaq over the past six months, but also competitor KLA-Tencor.

Micron Technology

This Boise-based semiconductor device maker saw short interest grow about 13 percent to more than 133.39 million shares, which was almost 13 percent of the float. That was the greatest number of shares sold short in the past year. It would take about three days to close out all of the short positions.

Hedge fund manager David Einhorn revealed a stake in Micron Technology during the period. The company has a market cap of more than $24 billion. The long-term EPS growth forecast of this S&P 500 component is near 18 percent, and the forward earnings multiple is less than the trailing price-to-earnings (P/E) ratio.

Of the 31 analysts who were surveyed, 15 recommend buying shares, with eight of them rating the stock at Strong Buy. The current share price is higher than their mean price target, meaning that the analysts see no upside potential at this time. But the street-high target implies 26 percent upside in the next year.

Shares are trading near a multiyear high, after rising more than 20 in the past month and about 80 in the past six months. Micron Technology has outperformed the Nasdaq and the Dow Jones Industrial Average over the past six months.


The number of shares sold short in this San Diego-based company jumped more than 29 percent to more than 23.71 million shares in the final weeks of November. That was more than one percent of the float and the highest level of short interest since September. The days to cover was about two.

Qualcomm is expected to post a marginal EPS decline but strong revenue growth for the current quarter. It has a market cap of about $123 billion and a dividend yield near 1.9 percent. The long-term EPS growth forecast of this S&P 500 component is more than 16 percent, and its return on equity is more than 18 percent.

Of the 43 analysts polled, 12 rate the stock at Strong Buy, and another 20 also recommend buying shares. They believe the shares have some head room, as their mean price target is more than six percent higher than the current share price. That would be a level the shares have not seen since 2000.

The stock trading more than six percent higher than a month ago and more than 19 percent higher than six months ago. Qualcomm has outperformed Broadcom and the Nasdaq but underperformed Texas Instruments over the past six months.

See also: Biogen Idec, Pharmacyclics See Surges In Short Interest

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

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