Evercore sees 12-year highs ahead for Marvell shares
Marvell Technology Group Ltd. (NASDAQ:MRVL) is trading higher following a round of bullish commentary from the analyst community. This morning, for example, it was Deutsche Bank that upgraded the chip name to a "buy" from a "hold." And yesterday evening, Evercore initiated coverage on Marvell with an "outperform" rating and a $27 price target, a 30% premium to the stock's current perch and territory not seen since 2006.
At last check, MRVL was up 4.5% to trade at $20.81. Looking back, Marvell stock has struggled to breakout in 2018, recently falling back below its year-to-date breakeven level. Despite the rally today, the shares remain tucked underneath their 200-day moving average, a previously supportive trendline Marvell breached last week.
An extended breakout could be fueled by a short squeeze, however. Short interest now stands at 52.74 million shares -- the most since at least 2002 -- and represents nearly 13% of MRVL's total available float. It would take more than a week for shorts to buy back their shares, at the stock's average trading volume.
Options buyers have handily favored calls in the past 10 days. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 15,541 calls in the last 10 sessions, compared to 314 puts. The resultant call/put volume ratio ranks in the 100th percentile of its annual range, indicating a much healthier-than-usual appetite for long calls over puts during the past two weeks.
Digging deeper, the July 23 call saw the largest increase in open interest during this time frame. According to data from the major options exchanges, the majority of the activity at this strike has been of the buy-to-open kind, indicating options traders are banking on MRVL to keep climbing higher within the next three weeks.
Meanwhile, now's a great time to target short-term options on the semiconductor concern. This is according to its Schaeffer's Volatility Index (SVI) of 40%, which ranks in the 23rd percentile of its annual range.