Monday, May 9, 2011

Brightpoint, Inc. (NASDAQ: CELL) Q3 2011 Price Target

Recent price: 9.01$
P/E Ratio: 14.77
3 Months Target Price: 11$

Company Description
Brightpoint, Inc. provides supply chain solutions to the wireless technology industry. The Company’s primary business is moving wireless devices closer to, or directly into, the hands of mobile subscribers. Its business includes distribution channel management, logistic services, activation services and the sale of prepaid airtime. During the year ended December 31, 2009, the Company handled a total of approximately 83.5 million wireless devices. It handled approximately 64.3 million wireless devices through its logistic services business and approximately 19.2 million through its distribution business. The Company provides customized logistic services, including procurement, inventory management, software loading, kitting and customized packaging, fulfillment, credit services and receivables management, call center and activation services, Website hosting, e-fulfillment solutions, reverse logistics, transportation management and other services within the global wireless industry.

Confidence Margins
Strong resistance $13.22 (+46%)
Light resistance $11.20 (+24%)
Light support $8.15 (-10%)
Strong support $6.24 (-31%)

Even after Brightpoint Inc reported record numbers and a revenue outlook that came in better than what analyst's were expecting, shares of the mobile phone carrier have been severely hammered by the market. The prices created by this incomprehensible misfortune are great entry points and should yield excellent returns as soon as the market notices how undervalued this company has become.

Entry strategy
For the cautious investor:
Buy the stock for 9.50$ or less.

For the risk-taking trader:
The October 2011 10$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 300$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 11$, or keep it until 13$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 11$. 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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