Shares of ResMed Inc. (NYSE:RMD) -- a medical device company specializing in sleep apnea -- are exploding higher today, thanks to well-received fiscal second-quarter earnings and a subsequent round of bullish analyst attention. RMD stock was last seen trading 15.6% higher at $101.67, earlier topping out at a record peak of $104.78 and coming in as the top S&P 500 Index (SPX) performer today. Further, the shares are pacing for their best day since September 2010.
Brokerage firms Northland Capital and Needham both upgraded the equity --- but just to the equivalent of a "hold." And while a number of other analysts raised their price targets, even the highest price target -- $92.50 from Morgan Stanley -- stands below the current share price.
This lack of respect from analysts is nothing new, though, with the majority of those in coverage handing out "hold" or worse opinions. This pessimism comes despite the fact RMD has been notching one record high after another in recent years, adding 59% in the past 12 months alone.
Some bearish traders are starting to get the picture. For example, short interest has been falling fast for well over a year, including a 13.4% drop in the last two reporting periods. However, the 5.83 million Resmed shares still controlled by short sellers equates to more than three weeks' worth of buying power, based on the stock's average daily volume. In other words, there's room for the short squeeze to continue.