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In early September, I recommended Byrna Technologies (BYRN) as a possible buy. But also mentioned that it was likely to hit resistance at $17.50 and $20 in the short term.
True to form, it hit $19.42 a few days ago, just before its latest earnings announcement
Then it happened… it rejected hard as soon as earnings came out.
So what’s going on here?
The Earnings Reaction
On the surface, Byrna’s earnings looked solid. The company was estimated to have a -$0.01 per share loss, but they reported a $0.04 profit instead. That’s an impressive beat, right?
Well, here’s the catch…
While Byrna beat expectations, some analysts out there were whispering about an even higher $0.05 per share target — and Byrna didn’t meet that mark.
And here’s where traders’ psychology comes into play.
They tend to overreact, especially when a stock has had a strong run-up leading into earnings, as BYRN has had over the last few weeks.
So, despite beating the street’s overall estimate, the fact that it missed some of those whisper numbers set the stage for a strong sell-off.
The good news is that, in my view, this drop doesn’t change the bigger picture.
Where I’m Looking to Buy
I’ve traded Byrna several times over the past year, and I’ve spotted key entry points during these kinds of pullbacks.
I first bought Byrna at $4.69 and sold at $10.49.
Bought it again at $12.19, sold at $14.49.
And then, I bought again at $12.19 and sold at $17.19.
So, what’s the common theme here?
That $12 mark has been a strong support level for BYRN multiple times. And I’m keeping a close eye to see if it pulls back into the $11 to $12 range again.
If it does, I’ll be looking to scoop up shares there and ride it up to new highs.
The Bigger Picture
Despite the recent drop, Byrna is still beating expectations in terms of growing revenue and earnings. And while the market is reacting negatively right now, I believe there’s still a solid long-term case for this stock.
Remember my long-term price target of $25 to $30? That hasn’t changed.
So, while we might see some more short-term volatility, the pullback we’re seeing could just be another opportunity for a strong entry.
Final Thoughts
The takeaway?
If you’re looking to get into BYRN or add to an existing position, consider waiting for that $11 to $12 range.
That’s where I’m planning to buy. And if it holds, we could be looking at another run to new highs in the months ahead.
Stay tuned.
— Geof Smith
P.S. I gave out a FREE trade in my Energy Superplay session today. Click here and go grab it!
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