Monday, March 7, 2011

Eastman Kodak Company (NYSE: EK) Q2 2011 Price Target

Recent price: 3.19$
P/E Ratio: -
3 Months Target Price: 2$

Company Description
According to Reuters, Eastman Kodak Company (Kodak), incorporated in 1901, is engaged in the sale of imaging products, technology, solutions and services to consumers, businesses and professionals. The Company’s products span digital still and video cameras and related accessories; consumer inkjet printers and media; digital picture frames; retail printing kiosks, APEX drylab systems and related media; KODAK Gallery online imaging services; prepress equipment and consumables; workflow software for commercial printing; electro-photographic equipment and consumables; commercial inkjet printing systems; document scanners; origination and print films for the entertainment industry; consumer and professional photographic film; photographic paper and processing chemicals, and wholesale photofinishing services. The Company operates in three business segments: Consumer Digital Imaging Group (CDG), Film, Photofinishing and Entertainment Group (FPEG), and Graphic Communications Group (GCG).

Confidence Margins
Strong resistance $3.84 (-20%)
Light resistance $3.48 (-9%)
Light support $3.00 (+6%%)
Strong support $2.00 (+37%)

The Eastman Kodak Company has lost most of the glow it had only 20 years ago. As reported on their last quarterly filing, the company is struggling and is not able to show any profit. Their products are not as appealing as those produced by the competition and the guidance they provided for 2011 disappointed many analysts and investors. This stock if a good bearish position to take.

Entry strategy
For the cautious investor:
Sell short the stock for 3.10$ or more.

For the risk-taking trader:
The July 2011 3.50$ put option contract seems to be the right position to take, they can be acquired for about 65$ per contract.

Exit Strategy
For the cautious investor:
Buy to cover when the stock reaches 2$, as shorting is a pretty risky strategy for a stock that has already fallen this much, it is suggested to keep the position on check if it would hover at current prices for a long time and even break the light resistance.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 2$. This should provide a very satisfactory return if the underlying reaches the target price as the contracts will get deeper in the money.

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