Semiconductor Stocks Tempting Short Sellers (BRCM, MRVL, MXIM)
Among the leading semiconductor stocks, Broadcom (NASDAQ: BRCM), Marvell Technology (NASDAQ: MU) and Maxim Integrated Products (NASDAQ: MXIM) saw the most significant swings in short interest between the December 31 and January 15 settlement dates.
The number of shares sold short of Advanced Micro Devices, Applied Materials, Avago Technologies, Cirrus Logic, Lam Research, Linear Technology, Micron Technology, NVIDIA and Qualcomm increased more modestly in that time.
Altera and Intel saw little change in short interest from the previous settlement date. But short sellers retreated from ARM Holdings, KLA-Tencor, STMicroelectronics, Texas Instruments and Xilinx in the first weeks of the year.
Below we take a closer look at how Broadcom, Marvell Technology and Maxim Integrated Products have fared and what analysts expect from them.
Short interest in this Irvine, California-based company increased more than 17 percent to more than 9.90 million shares in the period, or more than two percent of the float. That was on top of a more than seven percent gain in the previous period. The days to cover was more than one.
Broadcom launched enhanced 5G Wi-Fi video streaming for the home during the period. The company has a market capitalization of more than $16 billion and a dividend yield near 1.5 percent. The long-term earnings per share (EPS) growth forecast of this S&P 500 component is less than nine percent.
Of the 45 analysts surveyed by Thomson/First Call, nine rate the stock at Strong Buy and another 15 also recommend buying shares. Their mean price target, or where analysts expect the share price to go, is more than seven percent higher than the current share price. Shares traded higher than that last summer.
The share price is down about two percent in the past week, but still more than six percent higher than six months ago. The stock has not only underperformed the Nasdaq over the past six months, but larger competitors Qualcomm and Texas Instruments as well.
Short interest in this Bermuda-based company was more than 22 percent higher than in the previous period to more than 12.33 million shares. That took back most of the decline in the previous period, and it represented almost three percent of the total float. Days to cover was less than two.
This integrated circuits maker has a market cap of more than $7 billion and a dividend yield near 1.6 percent. During the period, Marvell denied that it was in talks with KKR to go private. The company has a long-term EPS growth forecast of about 10 percent, but the return on equity is about six percent.
For at least three months, the consensus recommendation of analysts surveyed has been to hold Marvell Technology shares. Note that the mean price target is about the same as the current share price. Unless analysts lift their price targets, no upside potential is indicated.
Shares are trading almost nine percent higher than they were a month ago, and the share price is more than 22 percent higher than six months ago. The stock has outperformed not only the likes of Texas Instruments over the past six months, but the Nasdaq and the S&P 500 as well.
Maxim Integrated Products
The number of shares sold short in this San Jose, California-based company jumped more than 32 percent to almost 7.00 million shares in the first weeks of the year. That was more than two percent of the float, as well as the highest level of short interest in the past year. The days to cover was about two.
Revenue for the current quarter is forecast to be flat year-on-year while EPS has declined. The company has a market cap more than $8 billion and a dividend yield of about 3.6 percent. The price-to-earnings (P/E) ratio is less than the industry average. The return on equity is about 17 percent.
The consensus recommendation of the analysts polled is to hold shares, and it has been for at least three months. They believe the shares have some head room, as their mean price target is about seven percent higher than the current share price. That target is less than the 52-week high, though.
The stock has risen about four percent in the past week, but shares are trading only marginally higher than they were six months ago. It has outperformed competitors Analog Devices and STMicroelectronics over the past six months. However, it has underperformed the Nasdaq in that time.
At the time of this writing, the author had no position in the mentioned equities.
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