Open interest is near an annual low despite the stock's upbeat earnings history
Alternative energy company First Solar, Inc. (NASDAQ:FSLR) is scheduled to report earnings after the market closes on Thursday, Feb. 22, and shareholders are hoping the stock can continue its streak of positive post-earnings performances. Specifically, FSLR shares have rallied in the session after earnings in three straight quarters, with one-day gains of 20.3%, 9.1%, and 11.8%. This time around the options market is pricing in a swing of 11.7%, going by implied volatility (IV) data.
Checking in on the charts, the stock has been strong, gaining 81.4% over the past 12 months. While the shares have pulled back from their Jan. 11 peak of $76.61, they bounced near the 120-day moving average, and are now being guided higher by the 80-day moving average. FSLR was last seen trading slightly higher on the day at $66.81, after the company announced plans to build a solar plant in Georgia.
Analysts have remained skeptical of First Solar stock despite the rosy technical picture. By the numbers, there are 15 brokerage firms tracking the equity, and the majority have just "hold" ratings in place. Plus, the average 12-month price target of $69.44 offers virtually no upside from current levels. This would suggest the shares could benefit from a round of bullish analyst attention in the near future -- especially if the company impresses in the earnings booth.
Two other sets of data are worth pointing out here. First of all, short interest has been falling precipitously on the security in recent months, including a 23.5% drop last reporting period. If this trend continues, it'll help the shares' chances of moving higher on the charts.
Meanwhile, potential options traders should note that FSLR has a Schaeffer's Volatility Scorecard (SVS) of 89, meaning it's shown a strong tendency to make bigger moves than the options market has priced in over the past year. Considering this and the equity's strong earnings history, it's surprising to note options open interest for First Solar currently sits 1 percentage point from an annual low.