Analyst: Buy This Stock After Big Pentagon Contract

PVTL stock is trading around its IPO price, but RBC has high hopes

Dec 20, 2018 at 1:25 PM
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While most U.S. stocks are swimming in red ink today, shares of Pivotal Software Inc (NYSE:PVTL) are bucking the trend to trade higher. Bolstering the equity is an upgrade to "outperform" from "sector perform" at RBC, which waxed optimistic on Pivotal's software and services contract with the U.S. Air Force, calling it "a very nice win" for the company. The defense contract could generate up to $100 million over the next year for Pivotal.

PVTL stock was last seen 3.1% higher to trade at $15.95. However, the shares are still pacing for a weekly loss of more than 8.5% -- set for their worst week since September -- and yesterday closed at $15.47, their lowest since going public on April 20. The security is still north of $15, however, which was its initial public offering (IPO) price, and represents roughly half its all-time high, touched in mid-June. Prior to today, PVTL's 14-day Relative Strength Index (RSI) stood at 32 -- on the cusp of oversold territory, suggesting a short-term bounce may have been in the cards.

PVTL stock chart dec 20

Despite the stock's slide in the second half of 2018, most analysts have remained bullish. In fact, half of the 10 brokerage firms following PVTL maintain "buy" or better endorsements, with not a "sell" in sight. Likewise, the average 12-month price target of $24.27 represents expected upside of more than 50% to the equity's current perch.

In addition, short sellers have been liquidating their positions. Short interest fell more than 14% in the past two reporting periods, yet Pivotal stock has failed to benefit. Still, 13.6% of the stock's total available float remains dedicated to these bearish bets.

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