SIMO on the Move!
Silicon Motion Technology Corp. (SIMO) has made headlines today, after the firm blew past analysts' fourth-quarter earnings expectations. Furthermore, the semiconductor concern issued upbeat first-quarter guidance, prompting an upgrade to "buy" from "hold" from analysts at Needham. As a result, the shares of SIMO have skyrocketed into new-high territory, triggering a surge in bullish option betting.
Already today, SIMO has seen about 1,300 calls cross the tape – roughly 14 times the number of SIMO puts traded, and more than 50 times its expected single-session call volume. More specifically, the equity's now near-the-money February 7.50 and March 7.50 calls have garnered the most attention, with almost 700 and 350 contracts exchanged, respectively. What's more, intraday volume has exceeded open interest at both strikes, and the majority of the near-term calls have traded closer to the ask price, pointing to buy-to-open activity.
From a broader sentiment standpoint, though, today's affinity for optimistic positions runs counter to the skepticism surrounding SIMO on the Street. According to Zacks, only two out of six analysts consider the security worthy of a "buy" or better rating. Meanwhile, Thomson Reuters deems the consensus 12-month price target on the stock at just $6.36, representing a discount to SIMO's new two-year high of $7.39. Plus, short interest accounts for more than 10% of the stock's total float, and would take about three weeks to unwind, at the equity's average pace of trading.
From a contrarian perspective, the pessimism plaguing SIMO could actually translate into a boon for the stock. Another flood of post-earnings analyst endorsements, or a significant short-squeeze situation, could add fuel to the security's fire.
In early afternoon trading, SIMO has added 31.5% to linger in the $7.31 neighborhood.
Source: Shaeffers Research.com |
