by Serge Berger | March 11, 2014 8:08 am
Wing slinger Buffalo Wild Wings (BWLD) popped back on my screens late last week as the price of BWLD stock pushed right into its November 2013 highs and looks ripe to break to fresh all-time highs any day now.
After Buffalo Wild Wings reported Q4 earnings on Feb. 4, BWLD shares reacted decidedly negatively the following day and was best left alone. Buffalo Wild Wings earnings came in at $1.10 per share to beat expectations by 3 cents, but revenues of $341.50 million, while up 12% year-over-year, were shy of the consensus estimate for $346.88 million. This likely acted as the catalyst for the immediate post-earnings selloff, even though the EPS figure was 24% higher than the year-ago period.
After a little consolidation period, however, BWLD stock managed to get back on its feet, which brings it to the current juncture.
As usual, analysts were quick to come out with their updates on the stock, and surprisingly both Miller Tabak and Longbow Research took a positive stands on the stock after earnings. Miller Tabak upgraded BWLD stock from “hold” to “buy,” with a price target of $148, while Longbow Reserach initiated coverage with a “buy” and a price target of $165. In rather active fashion, as BWLD stock approached the $148 mark, Miller Tabak came out and downgraded shares back to a “hold” … but increased its price target to $155.
This type of analyst coverage is something to keep an eye on, particularly when price targets match up with interesting technical levels on the stock charts.
Through the multiyear lens, BWLD stock continues its march higher as multimonth consolidation periods hold important technical support lines and allow the stock to work off its overbought readings. The below weekly chart nicely shows the series of consolidation periods followed by breakout rallies.
The only thing concerning on this chart — and it’s a notable concern — is the ultra-steep run that Buffalo Wild Wings shares had over the past 12 months. In the bigger picture, this likely somewhat limits the upside for the stock.
On the daily chart, the post-earnings selloff in early February literally was a one-day event, although the stock needed another 11 trading days thereafter to consolidate the negative reaction before again working its way higher. This is depicted on the chart below, when on Feb. 24, BWLD stock began breaking out/higher of a tight triangle formation. Quick traders found a first long-side opportunity there.
Now that the stock has worked its way up to the triple top (three blue bubbles), the odds both from a pattern and a momentum perspective favor an eventual break to higher highs, if only for a short moment.
A push past the $152 area should target the $160 level.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
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