Surging Tech Stock Hit with Rare Downgrade

Immersion stock has more than doubled in value in 2018

Jun 18, 2018 at 9:39 AM
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Touch technology specialist Immersion Corporation (NASDAQ:IMMR) is trading down 7.8% today at $15.20, following a downgrade to "hold" from "buy" at Craig-Hallum. This news is overshadowing the company's licensing agreement with Calsonic Kansei. It also marks the first analyst rating that's not a "buy" on IMMR shares, which had been surging coming into today.

In fact, the stock has easily doubled in value on a year-to-date basis, and just touched a 10-year high of $17.70 on June 13. Helping the equity along the way were some well-received earnings releases, as the shares have gained the day after the last three reports. Looking in at the most recent report in early May, the company blew past Wall Street's expectations, posting adjusted earnings per share of $2.34, compared to the average forecast of $1.57.

The fundamental and technical strength has short sellers fleeing. In just the last reporting period, short interest fell almost 35% -- though more than 8% of the security's float remains sold short. As for options activity, volume has been light on an absolute basis, but traders have mostly targeted long calls. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 9.84 for IMMR.

Either way, data suggests it's a good time to consider near-term Immersion Corporation options contracts. That's based on the stock's Schaeffer's Volatility Index (SVI) of 44%, ranking in just the 10th annual percentile, hinting at lower-than-usual volatility expectations at the moment.

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