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If the current price of CommVault (CVLT) continues to climb, many short investors will find themselves in the middle of a major short squeeze. On September 25, I wrote an article telling shorts that they should be prepared to cover their positions. Actually the shares do not even have to continue to climb in value. There are open puts as low as $40 a share. Here are all of the puts for CVLT according to Yahoo Finance, as of Friday October 4. Since the current price is floating between $80 and $90 a share, the market is teasing the bulk of the shorts that are in that range. Most are hoping for some sort of macro dip due to the current government shutdown. However, at the time of this writing, that has not happened.

Put OptionsExpire at close Saturday, October 19, 2013
StrikeSymbolLastChgBidAskVolOpen Int
40.00CVLT131019P000400000.400.00N/A0.10120
45.00CVLT131019P000450000.050.00N/A0.10126
50.00CVLT131019P000500000.100.00N/A0.251960
55.00CVLT131019P000550000.050.00N/A0.10150
60.00CVLT131019P000600000.100.00N/A0.102071
62.50CVLT131019P000625000.200.00N/A0.10418
65.00CVLT131019P000650000.750.00N/A0.1010131
67.50CVLT131019P000675000.550.00N/A0.101053
70.00CVLT131019P000700000.050.00N/A0.10848
72.50CVLT131019P000725000.050.000.050.101554
75.00CVLT131019P000750000.150.00N/A0.15387
77.50CVLT131019P000775000.170.000.050.151051
80.00CVLT131019P000800000.500.000.150.252379
82.50CVLT131019P000825000.500.170.350.5010131
85.00CVLT131019P000850000.850.450.750.8510159
87.50CVLT131019P000875001.570.831.501.6530369
90.00CVLT131019P000900002.850.002.652.852299
92.50CVLT131019P000925008.700.004.206.10519
95.00CVLT131019P000950009.500.006.208.401020
Highlighted options are in-the-money.

There are currently 1.81 million shares that have been shorted. Even though this is less than 5% of the float, it would take at least 8 trading days to cover all of the positions. If a dip does not come in time, there will be a high price to pay for the shorts that gambled and waited. Analysts are all over the board as to what that price will be. Recent ratings range from $75 a share to a high of $115. But even if the price did hit the low target of $75, there are a lot of shorts that will get burned.

DateFirmAction Old RatingNew RatingOld Price TargetNew Price Target
9/26Jefferies GroupReiterated Rating Hold $78.00
9/26Pacific CrestBoost Price Target Outperform$92.00$105.00
8/22Lazard Capital MarketsSet Price Target Buy$95.00$115.00
8/1Credit SuisseBoost Price Target Neutral$65.00$75.00
5/8RBC CapitalBoost Price Target Sector Perform$75.00$85.00
5/8MizuhoBoost Price Target Neutral$54.00$80.00
5/2Piper Jaffray Cos.Upgrade NeutralOverweight$74.00$84.00

The company offers "cloud" software to protect the data of large corporations worldwide. The new Simpana 10 product has many other functions compared to other similar software. According to a press release on Friday:

CommVault's Simpana® software suite of products was designed to work together seamlessly from the ground up, sharing a single code and common function set, to deliver superlative Data Protection, Archive, Replication, Search and Resource Management capabilities.

CVLT also announced that earnings results will be released October 29 on a Company Conference Call (PR link above). There were a couple of comments on my last article saying that CommVault's growth may be slowing down, and that this will be apparent when earnings are released. The shorts are betting everything on that. However, when CommVault is compared to industry leaders, it ranks very high for a Small Cap. Even its revenue growth is in the top third. As far as earnings growth CommVault ranks number 11 out of 155.

CVLT vs. Industry Leaders

StatisticIndustry LeaderCVLTCVLT's Rank
Market CapitalizationOracle (NYSE:ORCL)151.35B4.15B17 / 155
P/E Ratio (ttm)SPS Commerce (NASDAQ:SPSC)947.2976.7412 / 155
PEG Ratio (ttm, 5 yr expected)Agilysis (NASDAQ:AGYS)7.832.0321 / 155
Revenue Growth (Qtrly YoY)Liquid Holdings (NASDAQ:LIQD)752.10%20.80%47 / 155
EPS Growth (Qtrly YoY)Open Text (NASDAQ:OTEX)441.80%28.60%11 / 155
Long-Term Growth Rate (5 yr)Cornerstone OnDemand (NASDAQ:CSOD)50.00%25.00%16 / 155
Return on Equity (ttm)Cadence Design (NASDAQ:CDNS)59.72%17.73%15 / 155
Long-Term Debt/Equity (mrq) N/A
Dividend Yield (annual)American Software (NASDAQ:AMSWA)4.80%N/AN/A

Many shorts are also looking at the relatively high Price to Earnings Ratio of 76. However this is very low compared to the other leaders in the industry according to Yahoo. And the forward P/E is only 45. A lot is riding on the revenue and earnings results from this past quarter. The success of Simpana 10 may be the catalyst that CommVault needs to send it out of Small Cap status. Until then, a lot of shorts may have some sleepless nights.

Source: CommVault Shorts: It's Time To Worry