Semtech reports earnings after the market closes on Tuesday, May 27
Earlier this week, we called Urban Outfitters (URBN) a sleeping giant ahead of earnings. Semtech Corp (NASDAQ:SMTC) fits a somewhat similar criteria; the semiconductor company reports first-quarter earnings after the marker closes next Tuesday, May 27, and bearish bettors have been piling on.
SMTC has a history of outsized post-earnings moves. The stock gapped higher by 21.5% after its quarterly report in March, and added 18.1% after its earnings report in late November. The shares averaged a post-earnings move, regardless of direction, of 11.4% after the last eight reports. This time around, the options market is pricing in a larger-than-usual post-earnings swing of 14.3%.
The stock was last seen trading at $38.05, consolidating below $40 after bouncing off April 21 12-month lows of $24.05. The shares are down 38.4% year-to-date, and the 80-day moving average is a key pivot point going forward.
A short squeeze could help clear that trendline. Short interest is down 10% in the two most recent reporting periods, yet the 6.63 million shares sold short still accounts for a healthy 7.7% of SMTC's total available float.
It is also worth noting that the security's Schaeffer's Volatility Scorecard (SVS) sits at 89 out of 100. In other words, the equity has exceeded option traders' volatility expectations during the last 12 months.