Market Overview

3 Semiconductor Stocks See Swings In Short Interest


Short sellers seemed to get more selective among the leading semiconductor-related stocks between the July 15 and July 31 settlement dates. They retreated particularly from Marvell Technology Group Ltd. (NASDAQ: MRVL) and Maxim Integrated Products Inc. (NASDAQ: MXIM).

On the other hand, short interest in Skyworks Solutions Inc (NASDAQ: SWKS) was up sharply during the final 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.

See also: Is Tesla The Best Short In The Market?

Marvell Technology

The number of shares sold short in this San Jose, California-based company tumbled about 30 percent to more than 7.63 million shares in the final weeks of the month. That was less than 2 percent of the float, and it was the lowest level of short interest since March. Days to cover was less than two.

The company has a market capitalization of more than $6 billion and a dividend yield of about 1.9 percent. The price-to-earnings (P/E) ratio is less than the industry average, but the return on equity is less than 7 percent. Note that analyst expectations are low for next week's earnings report.

The consensus recommendation of the analysts surveyed by Thomson/First Call is to hold shares, as it has been for at least three months. However, their mean price target, or where the analysts expect the share price will go, is more than 17 percent higher than the current share price.

The share price dropped more than 3 percent during the settlement period, while the Nasdaq was up fractionally. It is down more than 15 percent year to date, as of Thursday's close. Over the past six months, the stock has underperformed both the broader markets and larger competitor Texas Instruments.

Maxim Integrated Products

Short interest in this Bermuda-based company was more than 17 percent higher than in the previous period to more than 6.76 million shares, or more than 2 percent of the float. At the average daily trading volume, it would take about less than two days to cover all short positions.

An analyst upgrade during the period gave shares a nice pop. Maxim's market capitalization is more than $9 billion and the dividend yield is near 3.6 percent. The company has a long-term earnings per share (EPS) growth forecast of more than 12 percent and an operating margin greater than the industry average.

For at least three months, the consensus recommendation of the analysts surveyed has been to hold the shares. A move to their mean price target would be a gain of around 6 percent for the shares. Note however that their consensus target is less than the 52-week high set back in March.

In the two-week short interest period, shares were up more than 7 percent at one point but gave up most of that gain. They are now up more than 6 percent year to date. The stock has outperformed larger competitor Texas Instruments over the past six months, but it underperformed the Nasdaq.

Skyworks Solutions

Short interest in this Massachusetts-based integrated circuit maker jumped about 28 percent to more than 8.55 million shares in the period. That was more than 4 percent of the float, as well as the greatest number of shares short year to date. The average daily trading volume hit a four-month high.

This Apple supplier offered an earnings surprise during the period. The company has a market cap near $17 billion and a dividend yield near 1.2 percent. This S&P 500 component also has an operating margin that is better than the industry average, as well as a return on equity of more than 26 percent.

Of the 23 analysts polled, 18 of them recommend buying Skyworks shares. And they believe the shares have plenty of room to run, as their mean price target is more than 24 percent higher than the current share price. The analysts' consensus target would be a multiyear high for the shares.

The share price ended the two-week period down more than 6 percent, and it has pulled back about as much again since, testing the 200-day moving average. Yet the stock has not only outperformed the broader markets over the past six months, but smaller competitor Qorvo as well.

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And Others

Short sellers shied away from Altera, Analog Devices, Applied Materials, Intel, NVIDIA, ON Semiconductor, Qorvo and Qualcomm more modestly in the period.

The short interest in Micron Technology ended the period about where it began.

Advanced Micro Devices, Avago Technologies, Broadcom, Linear Technology, Texas Instruments and Xilinx saw some gain in the numbers of their shares short in late July.

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


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