Early this morning, Titan Machinery Inc. (TITN - 24.40) reported strong quarterly results, citing a strong demand for its tractors and other farming equipment. TITN said its third-quarter profit jumped 66% to $12.8 million, or 61 cents per share, from $7.71 million, or 42 cents per share, in the same period last year. Revenue, meanwhile, rose 36% to $423 million. The Fargo, N.D.-based company's results topped expectations, as Wall Street predicted a bottom line of 50 cents per share on $384 million in sales. For fiscal 2012, TITN raised its earnings forecast by 20 cents to $1.76 to $1.86 per share, and lifted its revenue guidance by $95 million to a range of $1.43 billion to $1.5 billion.
Consequently, it's not difficult to see why TITN has such a strong following. According to Zacks, 80% of analysts interested in the agriculture and construction equipment retailer consider it worthy of a "strong buy" endorsement. Moreover, the average 12-month price target -- as determined by Thomson Reuters -- sits at $32.90, which represents a premium of 43.4% to Thursday's closing price of $22.89.
But not everyone on Wall Street is enamored of TITN. Although short interest dropped 3.1% during the past month, it still makes up 9.1% of the security's available float. In fact, at TITN's typical pace of trading, it would take over seven sessions to repurchase all of these bearish bets.
Even the options crowd holds a negative view of TITN. During the past 10 days, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 0.53 put for every call. This ratio lands just nine percentage points from a pessimistic peak, signaling that traders on these exchanges have seldom bought bearish bets over bullish at a faster clip during the past year.
Thanks to its better-than-expected results, TITN is up more than 6.5% today, adding to its 18.6% year-to-date gain. The stock opened the trading day above the $25 mark, and is currently attempting to find a foothold in the $24-$25 range, which has provided a solid lid for the shares since early September.
In light of TITN's fundamental and technical strengths, an unwinding of skepticism among the options crowd, or a short-squeeze situation, could give the stock the boost it needs to climb above this level in the near term.
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