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Microsemi (MSCC) CEO gets vote of confidence from board

MSCC logoMicrosemi (NASDAQ: MSCC - option chain) shares have jumped higher today after the company's board said it will review CEO James Peterson's academic credentials, but that it supports him and does not plan to change his role in the company. The review is in response to reports that Peterson misrepresented his degrees from Brigham Young University. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on MSCC.

MSCC opened this morning at $11.85. So far today the stock has hit a low of $11.75 and a high of $13.10. As of 12:45, MSCC is trading at $12.87, up $1.54 (13.6%). The chart for MSCC looks bullish and S&P gives MSCC a positive 4 STARS (out of 5) buy ranking.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just six weeks as long as MSCC is above $10 at January expiration. Microsemi would have to fall by more than 22% before we would start to lose money. Learn more about this type of trade here.

MSCC hasn't been below $10 at all in the past year and has shown support around $10.30 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MSCC.

Analyst initiations: OMPI, MSCC, MRO and ENP

MOST NOTEWORTHY: Obagi Medical, Medical, Microsemi, Marathon Oil and Encore Energy were today's noteworthy initiations:
  • Obagi Medical Products (NASDAQ: OMPI) was initiated with a Positive rating at Susquehanna, as they like Obagi's growth opportunity in the aesthetics-dermatology market and views the company as an interesting take-out target for a larger specialty pharmaceutical company.
  • Montgomery believes Microsemi Corporation's (NASDAQ: MSCC) core business is on track and gaining momentum based on leverage in both high-reliability and high-performance analog. The firm started shares with a Buy rating and $34 target.
  • Goldman initiated Marathon Oil Corporation (NYSE: MRO) with a Buy rating and $72 target, as they view Marathon as most favorably leveraged refining company and would use seasonal weakness in refining margins as a buying opportunity.
  • RBC Capital sees a large opportunity for Encore Energy Parners (NYSE: ENP) to grow its reserves from internal negotiated transactions from its parent, Encore Acquisition Companies (NYSE: EAC), starting shares off with an Outperform rating and $26 target.
OTHER INITIATIONS:

Analyst initiations 5-16-07: AXP, CROX, EK, MA and URBN

MOST NOTEWORTHY: Crocs, Inc (CROX), Plantronics, Inc (PLT), MasterCard Inc (MA) and American Express Co (AXP) top Wednesday's noteworthy list:
  • JP Morgan started Crocs Inc (NASDAQ: CROX) with an Overweight rating based on the company's strong growth model.
  • JMP Securities upgraded Plantronics Inc (NYSE: PLT) with a Market Perform citing price competition and visibility in the speaker market.
  • MasterCard Inc (NYSE: MA) was started with an Underweight rating at Thomas Weisel citing concerns regarding increased pressure from bank issuing partners regarding fees and reduced cross border pricing benefits. Additionally,
  • Thomas Weisel started American Express Co (NYSE: AXP) with an Overweight rating, expecting increased card issuance migration and merchant migration due to increased pressure on bank fees and increasing consumer demand for rewards...
OTHER INITIATIONS:
Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Symbol Lookup
IndexesChangePrice
DJIA-8.3910,218.55
NASDAQ-7.392,146.67
S&P 500-2.901,090.18

Last updated: November 10, 2009: 11:42 AM

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