Needham & Company Option Strategy on Guess? (GES): Buy March 45 Calls in Front of Next Week’s Earnings Report
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Price: $16.81 --0%
Rating Summary:
4 Buy, 9 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
4 Buy, 9 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Needham & Company Option Strategy on Guess? (NYSE: GES)
Needham analyst says, "GES is trading approximately 12.5x its next twelve months’ EPS vs. the group which trades around 15x. The company is expected to report its earnings next Thursday, March 17th. Needham analyst, Christine Chen, believes the company will report solid earnings (we're at $1.09 vs. the street at $1.06). There's concern out there that GES’ domestic comp, which they guided in November to low to mid single digits, will be negative. We think worst case they come in flat, with their other regions, Asia and Europe, being very strong. Its promotional cadence has been in line with last year, if not even less so. We're at $3.61 for next year and the street is at $3.50; we think guidance will at least bracket the street."
"Earnings happen to fall on the day before March expiration, March 17th, creating somewhat of a binary event for expiring contracts. We advise clients buy March 45 calls ahead of earnings. At 2.2% of the stock price, the calls are an affordable way to play a positive report, while minimizing downside risk. Given the most recent post-earnings moves of retailers, for example Urban Outfitters (Nasdaq: URBN) (down 20%) and American Eagle (NYSE: AEO) (up 6 %+), we think it is prudent to own calls as an alternative to owning the underlying."
Needham analyst says, "GES is trading approximately 12.5x its next twelve months’ EPS vs. the group which trades around 15x. The company is expected to report its earnings next Thursday, March 17th. Needham analyst, Christine Chen, believes the company will report solid earnings (we're at $1.09 vs. the street at $1.06). There's concern out there that GES’ domestic comp, which they guided in November to low to mid single digits, will be negative. We think worst case they come in flat, with their other regions, Asia and Europe, being very strong. Its promotional cadence has been in line with last year, if not even less so. We're at $3.61 for next year and the street is at $3.50; we think guidance will at least bracket the street."
"Earnings happen to fall on the day before March expiration, March 17th, creating somewhat of a binary event for expiring contracts. We advise clients buy March 45 calls ahead of earnings. At 2.2% of the stock price, the calls are an affordable way to play a positive report, while minimizing downside risk. Given the most recent post-earnings moves of retailers, for example Urban Outfitters (Nasdaq: URBN) (down 20%) and American Eagle (NYSE: AEO) (up 6 %+), we think it is prudent to own calls as an alternative to owning the underlying."
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