CUB Claws Higher as Takeover Talks Ramp Up

The news sparked a price-target hike to $52 from RBC

Digital Content Manager
Sep 23, 2020 at 9:15 AM
facebook twitter linkedin


It was reported last night that hedge fund Elliott Management and buyout firm Veritas Capital just made a joint bid to acquire aerospace member Cubic Corporation (NYSE:CUB). While the exact value of the offer is still off the table, according to those familiar with the matter, the offer is at a premium to CUB's Tuesday close of $54.73. Cubic currently has a market value of $1.7 billion. The stock is up 8.7% at $59.51 in response.

CUB has had a volatile past few days, as rumors over the buyout bid sent the stock surging on Monday, Sept. 21. The shares hit a seven-month high of roughly $61, and were able to shatter recent pressure at the 180-day moving average. And while the equity did pull back the next day, it is still trading well above this aforementioned trendline. Year-to-date, the equity carries a13.9% deficit.

Analysts are taking notice of the deal, too. Just yesterday, RBC lifted its price target to $52 from $48. However, the majority of analysts following CUB were already quite bullish, carrying eight "buy" or better ratings compared to just one "hold." Meanwhile, the 12-month consensus price target of $57.43 is a 4.9% premium to last night's close. 

Should today's positive price action continue, an unwinding of short interest could push CUB higher. In the most recent reporting period, short interest rose 4.5% to 4.21 million shares sold short. Further, it would take almost two weeks to buy back these bearish bets at Cubic stock's average daily pace of trading, leaving plenty of room for a short squeeze.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners