Among the leading semiconductor stocks, Applied Materials (NASDAQ: STM) saw the most significant rises in short interest between the September 30 and October 15 settlement dates.
The number of shares sold short in Advanced Micro Devices (NYSE: LSI) and Texas Instruments (NASDAQ: TXN) also grew somewhat.
The short interest in Broadcom (NASDAQ: BRCM) was essentially unchanged from the previous period.
However, short sellers retreated from KLA-Tencor (NASDAQ: KLAC), Marvell Technology (NASDAQ: MRVL), NVIDIA (NASDAQ: NVDA) and Qualcomm (NASDAQ: QCOM) in early October.
Here we take a closer look at how Applied Materials, Micron Technology and STMicroelectronics have fared and what analysts expect from them.
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This equipment and services provider to the semiconductor industry saw short interest jump more than 36 percent in the period to around 28.90 million shares. That was the greatest number of shares sold short in at least a year. The short interest was more than two percent of the float.
Applied Materials acquisition of Tokyo Electron for $9.4 billion remained the focus during the period. The Santa Clara, California-based company has a market capitalization of more than $21 billion and a dividend yield near 2.2 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 about the same as the current share price, meaning analysts see no upside potential at this time.
Shares have met resistance near $18 for the past month. The current share price is less than 50 percent higher year-to-date. 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).
This Boise-based semiconductor device maker saw short interest grow about 18 percent to 109.02 million shares, taking back most of the decline in the previous period. More than 10 percent of Micron shares were short at the end of the period, but the days to cover fell to less than two.
Micron Technology swung to a profit in the most recent quarter due to a one-time gain. The company has a market cap of a little more than $17 billion. The long-term EPS growth forecast of this S&P 500 component is near 18 percent, and the operating margin is better than the industry average.
Of the 31 analysts who were surveyed, 15 recommend buying shares, with eight of them rating the stock at Strong Buy. They believe the stock has plenty of headroom, as their mean price target is more than 23 percent higher than the current share price. Shares have not traded at that level since 2002.
The share price reached a new 52-week high earlier in the month but has pulled back more than 10 percent since then. It is still up about 150 percent year-to-date. The stock has outperformed the Nasdaq and the Dow Jones Industrial Average over the past six months.
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Short interest in this Swiss integrated circuits maker rose about 27 percent in the initial two weeks of October to more than 4.40 million shares. That was the greatest number of shares sold short in the past year. It would take about five days to close out all of the short positions.
Cisco Systems (NASDAQ: CSCO) awarded STMicroelectronics an Excellence in Sustainability Award during the period. The company has a market cap of more than $6 billion and a dividend yield near 4.6 percent. Note that the return on equity and the operating margin are both in the red.
The consensus recommendation of the seven polled analysts is to buy STMicroelectronics shares, and it has been for at least three months. Their mean price target is more than 16 percent higher than the current share price. However, shares were trading higher than that two weeks ago.
Shares have retreated more than 17 percent since the beginning of October, most of that decline coming last week following an earnings report. Over the past six months, the stock has underperformed larger competitor Texas Instruments and the S&P 500.
At the time of this writing, the author had no position in the mentioned equities.
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