Citron: This Tech CEO Reminds Us of Bernie Madoff

AMAT stock hit a 17-year high after upbeat analyst attention

Sep 18, 2017 at 2:54 PM
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U.S. stocks are trading higher this afternoon, with the Dow eyeing its fifth straight record close. Among the names in the spotlight today are tech stock Ubiquiti Networks Inc (NASDAQ:UBNT), semiconductor stock Applied Materials, Inc. (NASDAQ:AMAT), and telehealth company Teladoc Inc (NYSE:TDOC). Here's a quick look at what is moving shares of UBNT, AMAT, and TDOC.

Citron Research: Ubiquiti CEO Reminds Us of Madoff

Ubiquiti Networks stock is down 6.9% to trade at $51.15, after Citron Research called the company a "total fraud," with allusions to Valeant Pharmaceuticals and Enron. The Citron report takes aim at CEO Robert Pera ("one name comes to mind -- MADOFF") and Ubiquiti's operating metrics, and warns that "it is only time [sic]  before the SEC launches the formal investigation and Ubiquiti will go down in infamy amongst the many other Wall Street Frauds." As a result, UBNT shares touched $47.78 earlier -- their lowest level since June 1 -- and landed on the short-sale restricted list.

The tech stock touched a record high of $67.80 in early August, thanks to a big bull gap. Since then, however, UBNT shares have lost nearly a quarter of their value. Even before the Citron allegations, traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been upping the bearish ante of late. UBNT's 10-day put/call volume ratio of 10.12 ranks just 3 percentage points from an annual high. In other words, options players have bought more than 10 UBNT puts for every UBNT call in the past two weeks.

AMAT Hits 17-Year High After RBC Upgrade

Moving in the opposite direction are shares of Applied Materials stock, last seen trading 2.8% higher at $48.46. The semiconductor stock is up after RBC upgraded AMAT to "outperform" from "sector perform," and raised its price target to $55 from $48, citing optimism for the company's wafer front-end business. The upbeat analyst attention -- not to mention some sector tailwinds -- sent AMAT shares to a 17-year high of $48.53 earlier, continuing the stock's longer-term uptrend. Of the 14 analysts following AMAT, 11 recommend buying the shares.

Baird Cuts Teladoc Stock Rating But 'Remains Very Bullish'

Among the worst stocks on the New York Stock Exchange (NYSE) today is Teladoc, last seen down 7% to trade at $33.45. The telehealth stock is reeling after Baird cut its rating to "neutral" from "outperform," citing the company's valuation sustainability. The brokerage firm, however, stated it "remains very bullish with respect to the company's strategy and long-term growth potential."

The majority of analysts following TDOC are bullish, in fact, with 11 "strong buy" ratings, two lukewarm "holds," and not a single "sell" recommendation. This isn't too surprising, though, as the stock has more than doubled since January, reaching a record high of $37.50 on Thursday.

Shorts are likely cheering today's decline, however, as short interest has grown 18.6% during the past two reporting periods, and now accounts for 28.6% of TDOC's total available float. At the equity's average daily trading volume, it would take more than four weeks to cover these shorted shares.  


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