Excluding items, the quarterly loss would have been 30 cents per share. Revenue for the period fell 47% to $89.1 million, while gross margin contracted from 27.2% to 17%. Analysts were expecting a wider loss of 46 cents per share on slimmer revenue of $68.3 million.
Looking ahead, OVTI expects a fiscal first-quarter adjusted loss of seven cents to 16 cents per share, with revenue ranging between $90 million and $100 million. The forecast was unexpectedly upbeat; analysts surveyed by Thomson Reuters are expecting a first-quarter loss of 23 cents per share on $74 million in revenue.
As a result, OVTI scored an upgrade this morning from Needham, with the brokerage firm raising its rating from "hold" to "buy." The shares surged roughly 8% in the wake of all these bullish reports, extending the equity's year-to-date rally of 101.5%.
From a technical perspective, OVTI has now gapped above support from its 10-week moving average, which has been in place since the second week of January. The stock's momentum could potentially stall out near the $12 level, which is home to its declining 20-month moving average. OVTI hasn't finished a month on the north side of this trendline since March 2008.
However, a rush to cover by short sellers could help to propel the stock through this looming obstacle. Short interest accounts for a respectable 6.2% of OVTI's float, and it would take 5.8 trading days for all of these bearish bets to be repurchased at the security's average daily volume. In light of the better-than-expected fourth-quarter results, along with the company's sunny first-quarter outlook, it's a safe bet that many of these skeptical shorts will be rushing for the exits.