Apple Supplier Stock On Sale

ADSK shares could rally into December, if past is prologue

Nov 16, 2018 at 10:33 AM
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While Autodesk, Inc. (NASDAQ:ADSK) hasn't officially set a date to report quarterly earnings, the software concern is expected to unveil its third-quarter figures relatively soon (Thomson Reuters Eikon has a tentative date of Tuesday, Nov. 20). While several Apple suppliers have taken it on the chin in recent weeks, ADSK's recent pullback could be a buying opportunity, if history is any indicator.

After a post-earnings bull gap in August, Autodesk shares went on to touch an all-time high of $159.94 on Aug. 27. Since then, however, the equity has surrendered roughly 16% to trade at $134.37, and is back in a familiar range; the $125-$140 region contained the stock from March until the aforementioned August rally.

However, ADSK is now within one standard deviation of its 320-day moving average, after a lengthy stretch above this trendline. After similar pullbacks over the past three years, ADSK was higher one month later 67% of the time, averaging an impressive gain of 8.8%, per data from Schaeffer's Quantitative Analyst Chris Prybal.

ADSK stock chart nov 16

Should Autodesk once again enjoy a positive earnings reaction soon, an unwinding of pessimism in the options pits could propel the shares higher. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.23 registers in the 89th percentile of its annual range, indicating that near-term options traders are much more put-heavy than usual at the moment.

Short sellers could also be caught off-guard, if ADSK's pullback to the 320-day once again results in a short-term rally. Short interest on the iPad supplier surged nearly 41% in the past two reporting periods, to close to 7.5 million shares.


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