Abercrombie and Fitch (ANF) soared by 20% on Wednesday morning, after the clothing retailer posted earnings that beat Wall Street expectations.Â
While the stock is likely heading higher, we believe it is likely to pullback first.
The company reported earnings per share of $1.35 and total revenue of $1.15 billion, compared to analyst estimates of $1.15 and $1.13 billion. Management forecast annual sales to rise 2-4%, which also exceeded expectations. Further, the company is considering closing up to 40 stores, having already closed nearly 500 over the last 8 years.
Our approach to projecting the price action combines analyzing the stock’s market cycles with traditional technical analysis. After reviewing the cycles for ANF, it is likely still in the rising phase of its current cycle, approaching a brief corrective period in coming weeks.
ANF has now repaired itself, after making a double top and losing over 50% of its value. This rise suggests improved longer-term prospects.
The intermediate cycles imply a brief pullback is likely over the next few weeks, which would likely be a buying opportunity, with a projection near $26.50 in coming months.
Abercrombie & Fitch (ANF) Stock Weekly Chart
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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
