Energy Stock Flashing Bull Signal Before Earnings

PTEN is ripe for a short squeeze

Digital Content Manager
Feb 7, 2023 at 2:27 PM
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Raymond James weighed in on Patterson-UTI Energy, Inc. (NASDAQ:PTEN) today, as trimming its 2023 U.S. rig count forecast to 750 from 813 on lower natural gas prices, citing mild winter conditions and stronger U.S. production growth. The analyst in coverage also lowered its PTEN price target to $24 from $28, just ahead of the company's fourth-quarter earnings report, due out after tomorrow's close. At last check, PTEN is still up 1.8% at $16.30, adding to its 50.9% year-over-year lead.

It's also worth noting the stock recently pulled back to its 200-day moving average, which is a trendline with historically bullish implications. Per Schaeffer's Senior Quantitative Analyst Rocky White's latest study, PTEN saw five similar signals in the last three years, and was higher one month later 80% of the time to average a 5.9% gain.


 PTEN 200 Day 

The stock has a strong record of post-earnings reactions, too, finishing six of its past eight next-day sessions higher, including a 7.7% rise in October 2020. In the last two years, the shares averaged a move of 4.1%, regardless of direction, but the options pits are pricing in a much bigger-than-usual swing of 9.8% this time.

Short sellers have been piling on the equity, with short interest up 41.5% in the last two reporting periods. The 12.25 million shares sold short account for 5.8% of PTEN's available float, or roughly one week's worth of pent-up buying power, indicating the stock could be in line for a short squeeze if Wall Street likes the energy company's earnings report.


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