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Post-earnings trade setups: Card Factory and Boohoo


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Post-earnings trade setups: Card Factory and Boohoo

With just a handful of earnings released this week, Card Factory and Boohoo provide us with potential trading opportunities.

BG_boohoo_363355107.jpgSource: Bloomberg
 Joshua Mahony | Senior Market Analyst, London | Publication date: Friday 01 October 2021 

This article looks at some of the big movers off the back of recent earnings announcements, as we try to find stocks that provide potential trading opportunities. Typically, earnings announcements and trading statements will drive a shift or enhancement of market sentiment. While many see earnings as a significant risk when holding a stock, placing trades in the wake of such events allows for greater confidence that all market knowledge has been factored into current prices.

Card Factory

Card Factory shares have on the back foot over the course of the past four months, with the price falling back since the May peak of 97p.

This week’s earnings release saw their losses narrow from £22.2 million to £6.5 million. However, they also drew up plans to raise annual revenues to £600 million by 2026. The decline seen this week has taken the stock to a seven-month low, following a break below the 54p support level.

However, the wider uptrend highlights how this period of weakness could ultimately represent a buying opportunity for the stock. That view holds unless 30pm is taken out.

CARDC-Weekly11021.pngSource: ProRealTime

Boohoo

The past two years have been a rollercoaster for Boohoo shareholders, and this week has been no different.

A sharp rise in costs has cut profits by two-thirds. Higher freight costs have hit fast fashion retailers like Boohoo hard, with few signs of it ending as things stand. Shares have slumped back into a 14-month low yesterday, with £1.98 representing the next key support level in view.

Once this stock stabilizes, it is likely to have a protracted period of retracement given how far it has fallen on rising costs that are largely a temporary effect. Nonetheless, we are yet to see that turnaround signal quite yet.

BOO-Daily11021.pngSource: ProRealTime
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