The Apple Supplier Flashing Bullish Signals

Qorvo Inc has put in a strong technical performance, but low expectations surround the Apple supplier

Karee Venema
Apr 21, 2017 at 10:49 AM
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Apple Inc. (NASDAQ:AAPL) supplier Qorvo Inc (NASDAQ:QRVO) has put in a strong performance over the past 52 weeks, with the tech stock sporting a year-over-year advance of 55%. What's more, the shares hit an annual high of $72.42 on April 10, but were more recently seen trading at $70.65, holding firm above possible newfound support at $70. Despite these impressive stats, low expectations surround QRVO stock -- which could create fresh tailwinds down the road.

Qorvo Options Traders Target May Puts

Options traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been quick to initiate long puts over calls in recent weeks, per QRVO's 10-day put/call volume ratio of 2.15 -- in the 83rd annual percentile. Plus, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.37 ranks higher than 97% of all comparable readings taken in the past year, meaning short-term speculators have rarely been as put-skewed as they are now.

Drilling down, QRVO's top open interest position is the May 67.50 put, where more than 5,700 contracts reside. This level could contain any near-term pullbacks -- especially considering it coincides with the stock's rising 50-day moving average, and a 23.6% Fibonacci retracement of QRVO's 2017 surge -- as the hedges related to these bets unwind. 

qrvo stock daily price chart

Short Sellers, Analysts Have Room to Move On Qorvo Stock

What's more, a capitulation from short sellers would likely create a burst of buying power for the shares. Short interest surged 9.3% in the two most recent reporting periods, and now accounts for nearly 10% of QRVO stock's available float. It would take almost two weeks to buy back these shorted shares, at the equity's average pace of trading, pointing to ample sideline cash to fuel a bigger surge.

Meanwhile, there's ample room to for analysts to upwardly revise their outlooks on Qorvo Inc's (NASDAQ:QRVO) . Seven of 16 brokerages still maintain a "hold" or "sell" recommendation on the outperformer, while the average 12-month price target of $70.68 is in line with QRVO stock's current perch. A round of bullish brokerage notes could draw new buyers to the table.

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