Pitney Bowes Inc. (PBI) — This company, once known solely for its postage meter, is now the largest maker of mailing systems, and it also provides production and document management equipment and facilities management services.
While Pitney Bowes is a leader in its market, that market is struggling. The company has fallen on hard times with weaker mail demand and revenue declines. In April 2013, it cut its dividend in half, and PBI stock plunged nearly 16% in one day.
In an effort to respond to competitive pressures, Pitney Bowes cut its workforce, enhanced procurement processes and outsourced many operations. But so far, management’s initiatives have failed to produce dramatic improvements.
Following the break of its bullish support line in July, PBI stock established a bearish resistance line near $28 in September. A death cross followed in October. The resistance line was tested in November at just under $26, and again, PBI stock failed to overcome it.
Now a definitive downtrend has been established. Rallies will most likely be contained by resistance at its downtrend line, its 200-day moving average at $26, or its 50-day moving average at $24.44. Momentum and MACD are negative.
Both long-term investors and shorter-term traders should be aware of the negative technical outlook and take appropriate action. Current shareholders could write options on their holdings, while traders should sell PBI stock.
Short sales at the current price could bring in a nice profit by year end. Place a stop-loss order above $26 to protect against a reversal. Also, check with your broker for any special requirements for short selling, including the ability to borrow shares.
