Analyst Upgrades Could Spark More Upside For AMD Stock

Plus, more than one-fifth of the stocks available float is dedicated to short interest

Jun 26, 2018 at 10:28 AM
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Advanced Micro Devices, Inc. (NASDAQ:AMD) rallied hard off its early April lows near $9, topping out at an 11-year peak at $17.34 this past Monday, June 18. Since then, the chip stock has pulled back to its rising 20-day moving average, which currently resides in the $15-$16 area -- a level of resistance in early and mid-2017, that could now be switching to a more supportive role.

amd daily chart june 22

There's plenty of skepticism priced into the shares, which are up a whopping 53% year-to-date. In fact, half of the analysts covering AMD maintain a "hold" or "sell" rating . This leaves the door wide open for upgrades to help stoke the bullish flames.

Plus, 174.6 million AMD shares are dedicated to short interest. This represents more than one-fifth of the stock's available float, and would take almost four days to cover, at the average pace of trading. A capitulation from some of the weaker bearish hands could buy the equity.

Short-term options are pricing in relatively low volatility expectations, as Schaeffer's Volatility Index (SVI) of 49% ranks in the modest 25th annual percentile. This points to relatively tame premiums at the moment.

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