Gigamon Inc (GIMO) and the Case for a Bigger Bounce

Gigamon Inc is higher today, thanks to a rare bullish brokerage note

by Karee Venema

Published on Dec 15, 2014 at 12:04 PM
Updated on Apr 20, 2015 at 5:32 PM

Gigamon Inc (NYSE:GIMO) is 3.2% higher, after Raymond James upped its outlook on the shares to "outperform" from "market perform." This positive price action only echoes the equity's recent technical prowess, with the shares up 66% from their early October low of $9.95. What's more, the security has outpaced the broader S&P 500 Index (SPX) by 36 percentage points over the past two months.

Considering GIMO is still staring at a 41% year-to-date deficit, though, sentiment remains tilted toward the skeptical side. In the options pits, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.46 ranks in the 95th percentile of its annual range, meaning short-term speculators have been more put-heavy toward GIMO just 5% of the time within the past year.

Meanwhile, 12.9% of the stock's float is sold short, representing more than 11 sessions' worth of pent-up buying demand, at average daily trading levels. Plus, only one "buy" rating has been levied toward Gigamon Inc (NYSE:GIMO), versus six "holds" -- and the consensus 12-month price target of $16.25 stands at a discount to the stock's current perch at $16.55. Should the shares continue to rebound, an unwinding of skepticism from traders and/or analysts could translate into a fresh wave of buying power.

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