My first earnings short-squeeze play is biopharmaceutical player Questcor Pharmaceuticals(QCOR), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Questcor Pharmaceuticals to report revenue of $142.58 million on earnings of $1 per share.
Just last week, Mizuho upgraded Questcor ahead of its earnings report this week following checks that indicate improved fundamentals and reduced reimbursement concerns. The firm raised its price target to $41 per share.
The current short interest as a percentage of the float for Questcor Pharmaceuticals is extremely high at 45%. That means that out of the 49.77 million shares in the tradable float, 25.93 million shares are sold short by the bears. This is a big short interest on a stock with a relatively low tradable float. Any bullish earnings news could easily spark a monster short-squeeze for shares of QCOR post-earnings.
From a technical perspective, QCOR is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock recently bounced strong right off its 50-day moving average of $27.30 a share and that move is quickly pushing it within range of triggering a near-term breakout trade post-earnings.
If you're bullish on QCOR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $31.50 a share and then once it takes out its 200-day moving average of $33.93 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.6 million shares. If that breakout triggers, then QCOR could easily trend well north of $40 a share post-earnings.
I would simply avoid QCOR or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some near-term support at its 50-day moving average of $27.30 a share with high volume. If we get that move, then QCOR will set up to re-test or possibly take out its next major support levels at $24.75 to $24.38 a share. Any high-volume move below those levels will then put $21.37 into range for shares of QCOR.
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