Last Friday Black Box (BBOX, $29.31, up $1.30) fell nearly 15% after reporting earnings. Yesterday, the stock recovered about 5% of that loss but will it be short lived? The company’s numbers were decent but were below what one analyst had penciled in. In other words, although Black Box said it expects its fiscal 2009 profit to rise 46% and anticipates profits between $3.25 to $3.40 a share, sales were seen to be flat year-over-year.
Compare this to the $3.36-$3.60 a share Wall Street had expected the company to earn and you can see why the stock fell. Black Box also had its price target cut to $46 from $59 which reflected the lowered forecast.
The options for BBOX were active on Friday but had cooled down by the end of Tuesday’s trading session. However, there was noticeable volume in the June 30 calls (QBXFF, $0.80, up $0.25) and the June 25 puts (QBXRE, $0.20, unchanged) before the final bell sounded.
From a technical standpoint, the stock broke below many of its moving averages and could be filling in some gaps before it starts another leg down. Either way, it would be a stock I would avoid because the average daily volume is barely over 100,000 shares traded and the fills on your option orders may have a wider bid and ask because it is not as liquid as other stocks in the same sector.
Rick Rouse
Rick@OptionsMentoring.com
