A buyout proposal from Taiwanese sector peer Yageo Corp has the shares of electronic components maker Kemet Corporation (NYSE:KEM) up 10.8% at $25.60 -- eyeing a fresh yearly high. Specifically, Yageo said it plans on purchasing Kemet for $1.58 billion, or $27.20 per share -- a roughly 18% premium to KEM's Monday close -- in hopes of expanding globally.
Should these gains hold, KEM could notch its biggest percentage gain on a daily basis since May 16. Since its early September lows, the security has climbed higher, with pullbacks caught by its 20-day and 100-day moving averages. While the stock has cooled since running into pressure at the $24 level, today's pop has KEM breaking out of this region, set to close north of here for the first time since Sept. 2018.
While KEM only holds two analysts ratings, both in coverage call it a "strong buy." But, the consensus 12-month target price of $25.67 is now a discount to its current perch, implying there's ample room for price-target hikes that could boost the stock.
Despite this recent positive price action, short sellers have latched on to the equity, rising 19% in the last two reporting periods to 12.69 million shares sold short. These pessimistic positions make up nearly a quarter of KEM's available float, and would take over two weeks to cover at the equity's average pace of trading. Should some of these bearish bets begin to unwind, it could put some additional wind at the security's back.