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Whole Foods’ Chart Looks as Healthy as Its Earnings

Analysts raise targets after WFM reports better-than-expected earnings


Whole Foods Market (NASDAQ:WFM) — We’ve been a fan of this stock since Jan. 5, when, with the stock trading at $70, the Trade of the Day said, “Sales are expected to increase by 15% in 2012, and earnings are estimated to increase to $2.27 from $1.93 in 2011.” 

And on March 15, with WFM at $85, I said, “The adoption of a new price strategy, increased lower-priced offerings, and the square-footage expansion are expected to lead to better-than-average industry growth.” 

Since then, analysts increased the 2012 earnings estimate from $2.44 to $2.47. But on July 18, an analyst from Williams Capital Group downgraded WFM to a “perform/hold,” and the stock fell from $92.54 on July 19 to $81.55 on July 23. 

After the close Wednesday, the company reported Q2 earnings of 63 cents versus an expected 61 cents, and increased its FY earnings guidance to $2.51 to $2.52. The stock jumped above $94 in after-hours trading as analysts raised their mean target to $100.

Technically WFM has been in a powerful bull channel for over a year, and the analysts’ poor forecast was quickly corrected by market action. The technical target for WFM is $110.

Trade of the Day – Whole Foods Market (NASDAQ:WFM)
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Trade of the Day Chart Key

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