TMUS is still set for its best month in years
Wireless carrier T-Mobile Us Inc (NASDAQ:TMUS) is in the hot seat this morning -- despite the stock trading up 0.4% at $65.50 -- after the company reported a security breach that may have affected up to 3% of its 77 million customer base. While the AT&T (T) rival said the threat has been eliminated, and that no financial data, passwords, or social security numbers were compromised, select customer account information may be at risk.
TMUS has had a volatile year on the charts, as investors attempt to keep up with the company's planned Sprint (S) merger. The shares have chopped around between the $55 and $65 levels for most of 2018, and are at the upper end of that range now, touching a fresh annual high of $66.63 on Tuesday, Aug. 21. Earlier this month, TMUS stock skyrocketed amid reports that regulators are likely to approve the Sprint merger, and the equity is now on pace for its best month since November 2016.
Coming into today, analyst attention has been extremely optimistic. Of the 17 firms covering the mobile carrier, 15 sport "strong buy" recommendations, with not a single "sell" on the books. Plus, the stock's average 12-month price target of $77.17 comes in at an 18% premium to current levels, and sits in uncharted territory for TMUS.
Now also seems to be an attractive time for short-term options traders to speculate on T-Mobile stock. This is per the security's Schaeffer's Volatility Index (SVI) of 20%, which ranks in the low 7th percentile of its annual range. In other words, muted volatility expectations have been priced into short-term TMUS options -- a boon to potential buyers.
Lastly, short interest on T-Mobile stock fell 5.8% during the past two reporting periods, but still accounts for more than 12 million shares. At the cell phone carrier's average daily trading volume, it would take shorts just over a week to buy back their bearish bets.