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My final earnings short-squeeze play today is global provider of communications software and services
BSFT), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect BroadSoft to report revenue of $38.60 million on earnings of 11 cents per share.
This company has topped Wall Street analysts' estimates four times in the past four quarters. Just recently, William Blair said the company is closer to a collaboration with Google that could focus on enterprise resellers, system integrators and MSPs. The firm has an outperform rating on the stock.
The current short interest as a percentage of the float for BroadSoft is extremely high at 16%. That means that out of the 27.59 million shares in the tradable float, 4.16 million shares are sold short by the bears. This is a stock with a high short interest and relatively low tradable float. This is the perfect combination needed for a large short squeeze, if the bulls get the earnings news they're looking for.
From a technical perspective, BSFT is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. Just today, shares of BSFT have started to trend back above its 50-day moving average of $25.28 a share. That move is quickly pushing shares of BSFT within range of triggering a near-term breakout trade.
If you're in the bull camp on BSFT, 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 levels at $28 to $29.40 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 981,027 shares. If that breakout triggers, then BSFT will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $32.48 a share to $34 to $36 a share.
I would simply avoid BSFT or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day at $25.58 a share with high volume. If we get that move, then BSFT will set up to re-test or possibly take out its next major support levels at $23.32 to $22 a share. Any high-volume move below $22 a share will then put $20.45 into range for shares of BSFT.
To see more potential earnings short squeeze plays, check out the
Earnings Short Squeeze Plays portfolio on Stockpickr.
-- Written by Roberto Pedone in Madison, Wis.