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Another potential earnings short-squeeze play is
SAIC(SAI), which is set to release numbers on Thursday after the market close. This is a provider of scientific, engineering, systems integration, and technical services and solutions to agencies of the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, other civil agencies, state and local government agencies, foreign governments, and customers in commercial markets. Wall Street analysts, on average, expect SAIC to report revenue of $2.69 billion on earnings of 33 cents per share.
On Tuesday, shares of SAIC closed up 4.3% to $11.08 on heavy volume after Raymond James upgraded the stock, saying that shares have declined too much and buybacks or asset sales could help it rise. The firm upgraded the stock to outperform from market perform and slapped a $14 price target on the shares. Raymond James said the stock feels too cheap, trading at a 13% discount to government-information technology firms, even though it has better fundamentals.
The current short interest as a percentage of the float for SAIC is notable at 2.7%. That means that out of the 281.49 million shares in the tradable float, 7.25 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 9.9%, or by about 652,000 shares. This is far from a huge short interest, but if the bears are leaning too hard into this quarter with their recent adds, then it could see a decent short squeeze off bullish numbers.
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From a technical perspective, SAI is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has plunged since it hit its March high of $14.06 to a recent low of $10.30 a share. During that sharp drop, shares of SAI have consistently made lower highs and lower lows, which is bearish technical price action. That said, SAI has now started to bounce off oversold conditions since its relative strength index reading was well below 30 for the past couple of weeks.
If you're bullish on SAI, then I would wait until after its report and look for long-biased trades if this stock can manage to trigger a near-term break out above some overhead resistance at $11.29 a share with high-volume. Look for volume on that move that registers near or above its three-month average action of 2,708,990 shares. If we get that move, look for SAI to potentially trade back above its 50-day at $12 and its 200-day at $12.41 a share post-earnings.
I would avoid SAI or look for short-biased trades if the stock fails to trigger that breakout above $11.29, and then drops below some major near-term support at $10.30 a share with high-volume. If we get that action, then look for SAI to drop 10% to 15% if the bears hammer this stock lower post-earnings.