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One potential earnings short-squeeze play in the software and programming complex is
Tibco Software(TIBX), which is set to release numbers on Thursday after the market close. This company is a provider of middleware and infrastructure software. Wall Street analysts, on average, expect Tibco Software to report revenue of $244.87 million on earnings of 23 cents per share.
This company has topped Wall Street estimates for the last four quarters, and it's coming off a quarter where it beat estimates by one cent, after reporting net income of 15 cents per share versus estimates of 14 cents per share. Tibco Software has averaged year-over-year revenue growth of 22.7% over the last four quarters. This company is looking to register its fourth quarter in a row of income increases. Net income jumped 35.6% in the third quarter of the last fiscal year and 38.4% in the fourth quarter of the last fiscal year.
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The current short interest as a percentage of the float for Tibco Software is notable at 3.4%. That means that out of the 152.45 million shares in the tradable float, 5.28 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3.5%, or by about 179,000 shares. If the bears are caught pressing their bets too hard into this quarter, then we could easily see a tradable short-covering rally for shares of Tibco Software.
From a technical perspective, TIBX is currently trading below both its 50-day and 200-day
moving averages, which is bearish. This stock has sold off hard from its May high of $34.15 to a recent low of $25.00 a share. After that steep drop, shares of TIBX have started to trend sideways between $25 on the downside and $28.24 on the upside. A move outside of that range post-earnings will likely setup the next major trend for TIBX.
If you're in the bull camp on TIBX, I would look for long-biased trades if after earnings it triggers a breakout above some near-term overhead
resistance at $28.24 to $29.98 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 3,154,380 shares. If we get that action, then TIBX could easily hit $32 to $34 a share post-earnings if the bulls gain full control of this stock.
I would simply avoid TIBX or look for short-biased trades after earnings the stock fails to trigger that breakout, and then moves below some near-term
support at $25.64 to $25.00 a share with high volume. If we get that action, then TIBX could re-test and possibly take out its next significant support level at $22.90 a share.