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One potential earnings short-squeeze candidate is business services provider to medical groups
Athenahealth(ATHN - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Athenahealth to report revenue of $116.97 million on earnings of 28 cents per share.
Just last week, Raymond James downgraded shares of Athenahealth to outperform from strong buy based on valuation. The firm did raise its price target on the stock to $95 from $85. During the last quarter, this company reported revenue of $105.9 million, and GAAP sales came in 26% higher than the prior-year quarter's $83.7 million.
The current short interest as a percentage of the float for Athenahealth is extremely high at 21%. That means that out of the 35.58 million shares in the tradable float, 7.44 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.4%, or by about 102,000 shares. If the bears are caught leaning too hard into a strong quarter, then this stock could explode higher post-earnings.
From a technical perspective, ATHN is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last two months and change, with shares soaring higher from its low of $56.33 to its recent high of $90.84 a share. During that uptrend, shares of ATHN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ATHN within range of triggering a major breakout trade post-earnings.
If you're bullish on ATHN, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $90.84 to $94.46 a share with high volume. Look for volume on that move that hits registers near or above its three-month average volume of 553,973 shares. If that breakout triggers, then ATHN will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $97.37 a share. Any high-volume move above its 52-week high could then send shares of ATHN above $100 a share.
I would avoid ATHN or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $85.72 to $82.50 a share with high volume. If we get that move, then ATHN will set up to re-test or possibly take out its 200-day moving average of $79.69 a share or its 50-day moving average of $77.54 a share.