Novatel Wireless [NVTL] Analysis

Mike B., the same author who wrote in about Synalloy Corp [SYNL], Imergent [IIG], and Rochester Medical [ROCM], wrote in today to talk about NVTL, Novatel Wireless.

“Novatel Wireless has a huge short position – about 23% of the float (almost 6 million shares of the 27 million float):

The chart is almost picture-perfect:

The stock was trading between 19.30 – 20.30 in after hours, which puts it above the 19 resistance that it had. The MACD is crossing over into positive territory, and NVTL is above the 10,20,30 & 50-day moving averages.

I strongly feel that NVTL has almost no resistance now until about $22.50, but $24-$25 would not be out of the question based on so many shorts that refuse to cover and many of the analysts who have $15-$21 targets on the stock (pre-earnings), and will have to raise those.

Also, here is what Briefing.com had to say about NVTL.

Novatel Wireless beats by $0.05, guides above consensus (18.71 +0.52) : Reports Q1 (Mar) earnings of $0.40 per share, excluding non-recurring items, $0.05 better than the Reuters Estimates consensus of $0.35; revenues rose 173.4% year/year and 43% sequentially to $109.8 mln vs the $101.9 mln consensus. Co issues upside guidance for Q2 (Jun), sees EPS of $0.20-0.22 vs. $0.16 consensus; sees Q2 revs of $90.0 mln vs. $83.2 mln consensus. Co issues upside guidance for FY07, sees EPS of $1.00-1.05 vs. $0.89 consensus; sees FY07 revs of $380-390 mln vs. $369.2 mln consensus.

Please do your own research, but I purchased some shares today and I expect the above targets to be hit within a week or two.”