Is Millicom International Cellular (TIGO) a Strong Buy Based on Earnings Surprises, Declining Short Interest, and Analyst Optimism?

The recent performance of Millicom International Cellular (TIGO) has sparked renewed interest among momentum investors, driven by a combination of robust earnings surprises, a sharp decline in short interest, and mixed but cautiously optimistic analyst ratings. To evaluate whether TIGO is a compelling buy, we must dissect these factors through the lens of market sentiment and momentum dynamics.

Earnings Surprises: A Catalyst for Momentum

TIGO's Q3 2025 earnings report delivered a seismic beat, with earnings per share (EPS) of $1.17 far exceeding the consensus estimate of $0.65-a 80% outperformance. Revenue also surpassed expectations, hitting $1.42 billion against a projected $1.4 billion. Adjusted EBITDA reached a record $695 million, with a margin of 48.9%, the highest in the company's history. These results reflect operational discipline and strategic shifts toward digital services and postpaid customer growth according to the report.

Such a significant earnings beat often acts as a catalyst for momentum investing. When companies exceed expectations, it signals to the market that management is executing effectively, which can trigger a self-reinforcing cycle of buying. TIGO's stock surged 2.09% in premarket trading following the report, suggesting immediate investor confidence. For momentum traders, this kind of performance-paired with strong profitability metrics-can justify a bullish stance, especially if the trend persists.

Short Interest Trends: A Bearish Thinning

Short interest in TIGO has declined sharply, dropping 16.74% to 2.22 million shares as of October 31, 2025, representing 1.30% of the public float. This follows a broader trend of reduced bearish bets, with the short interest ratio at 3.3, indicating moderate pessimism. The decline in short positions suggests that investors are either covering existing shorts or avoiding new bearish bets, which can reduce downward pressure on the stock.

From a momentum perspective, falling short interest often correlates with positive sentiment. If TIGO continues to outperform, short sellers may face margin calls, forcing them to buy shares to cover positions-a classic short squeeze scenario. While the current short interest is not at extreme levels (unlike cases where it exceeds 10% of float), the downward trajectory aligns with the stock's recent strength.

Analyst Optimism: A Mixed but Encouraging Signal

Analyst ratings for TIGO present a nuanced picture. As of Q3 2025, the average rating is "Hold," with a consensus price target of $45.36-implying a 14.78% downside from the current price. However, recent updates from major firms add complexity. JPMorgan Chase & Co. raised its price target to $63.00 (a 24.11% upside) on November 17, 2025, maintaining an "overweight" rating, while Scotiabank kept its "Sector Perform" recommendation with a $46.80 target according to the report. The average one-year target across 10 analysts is $47.96, suggesting a modest 1.01% upside according to the analysis.

The divergence in analyst views highlights both caution and optimism. While the "Hold" consensus reflects prudence, the upward revision by JPMorgan underscores confidence in TIGO's ability to sustain its momentum. For momentum investors, the key is not just the ratings but the trajectory of price targets. The fact that some analysts are raising their estimates signals a potential shift in sentiment.

Balancing the Signals: Momentum Investing Considerations

The interplay of earnings strength, declining short interest, and analyst upgrades creates a favorable backdrop for momentum-driven strategies. However, investors must weigh these positives against potential headwinds. For instance, TIGO's revenue growth is partially offset by foreign exchange impacts, and its organic service revenue growth of 3.5% YoY, while positive, is modest. Additionally, technical analysts have flagged negative signals, including a "Strong Sell" recommendation based on falling trends.

Momentum investing thrives on conviction, but it also requires risk management. TIGO's earnings beat and short interest trends are strong tailwinds, but the stock's valuation and macroeconomic risks (e.g., currency volatility in emerging markets) warrant caution. The mixed analyst ratings further underscore the need for a balanced approach.

Conclusion: A Buy with Conditions

TIGO's Q3 performance and short interest trends make it an attractive candidate for momentum investors, particularly those focused on earnings-driven catalysts and short-covering dynamics. However, the stock's valuation and mixed analyst outlooks suggest that a "strong buy" label should come with caveats. Investors should monitor upcoming quarters for sustainability of earnings momentum and watch for further upgrades from key analysts like JPMorgan. For now, TIGO appears to be a "buy" for those comfortable with moderate risk and a medium-term horizon, but not a no-brainer for all portfolios.