Thursday, April 7, 2011

Barnes & Noble Inc (NYSE: BKS) Q2 2011 Price Target

Recent price: 9.58$
P/E Ratio: -
3 Months Target Price: 19$

Company Description
According to Reuters, Barnes & Noble, Inc. (Barnes & Noble) is a bookseller. The Company is a content, commerce and technology company that provides customers access to books, magazines, newspapers and other content across its multi-channel distribution platform. As of May 1, 2010, the Company operated 1,357 bookstores in 50 states, 637 bookstores on college campuses, and one a Web eCommerce sites, which includes the development of digital content products and software. Barnes & Noble operates in two segments: B&N Retail and B&N College. B&N Retail refers to Barnes & Noble excluding B&N College. The Company’s principal business is the sale of trade books (generally hardcover and paperback consumer titles, mass market paperbacks (such as mystery, romance, science fiction and other popular fiction), children’s books, eBooks and other digital content, eReaders and related accessories, bargain books, music and movies direct to customers through its bookstores or on Barnes &

Confidence Margins
Strong resistance $24.47 (+155%)
Light resistance $19.50 (+104%)
Light support $8.75 (-9%)
Strong support $8.00 (-16%)

Shares of Barnes & Noble has been trading sharply down since the beginning of the quarter after a series of bad news plagued the company. This situation provides investors with a great entry point for the coming months. Keep in mind that the operating industry of Barnes & Noble is showing signs of prolonged difficulties and for those temped to keep it for the long run, there are way more favourable industries to make one's capital work.

Entry strategy
For the cautious investor:
Buy the stock for 10$ or less.

For the risk-taking trader:
The July 2011 10$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 115$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 19$, or keep it until 24$ if you are more bullish in your own analysis. It is highly recommended to keep the position on check if it goes sour.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 19$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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