Option Trade 
Tech Data Corp (NASDAQ:TECD) Calls
 Monday, November 21, 2016

** OPTION TRADE: Buy the TECD MAR 17 2017 90.000 call at approximately $3.90. Place a pre-determined sell at $7.80.

Note: No protective stop losses added -- but if you wish to do so make it $1.55.

by Ian Harvey        

Monday, November 21, 2016

Tech Data Corp (NASDAQ:TECD), a wholesale distributor of technology products,) will release its earnings data on Tuesday, November 22nd. Tech Data Corp. has set its Q3 guidance at $1.20-1.30 EPS. For the third quarter of fiscal 2017, management expects revenues in a range of $6.25 billion to $6.45 billion (on a constant currency basis).

For the fiscal year, capex is expected to be $44 million.

Last quarter, the company posted a negative earnings surprise of 1.39%. It delivered positive surprises in two of the trailing four quarters, with an average beat of 3.61%.

According to Zacks Investment Research, “Tech Data Corp. is a leading provider of internet technology products, logistics management and other value-added services. The company distributes microcomputer hardware and software products to value-added resellers, corporate resellers, retailers, direct marketers and Internet resellers. The company’s broad assortment of vendors and products meets the customers’ need for a cost effective link to those vendors’ products offered through a single source.”

Tech Data is well positioned to achieve strong growth based on increasing demand for data center systems, cloud and mobility offerings in the long run. The higher level of spending in these areas is expected to drive revenue growth for Tech Data as the company consolidates its position in the fast-growing domain of data center, mobile technology, software and integrated supply chain.

Tech Data Corp. has a 50-day moving average price of $80.14 and a 200-day moving average price of $76.56. Tech Data Corp. has a one year low of $57.99 and a one year high of $88.70. The firm has a market cap of $2.93 billion, a P/E ratio of 13.53 and a beta of 0.87.

Why Tech Data?

Tech Data has a diversified customer base in both North America and Europe. In addition, the company continues to strengthen its position in the small and medium-business (SMB) customer segment in several countries, both organically and through acquisitions.

Acquisitions have been an integral part of the company’s growth strategy.  Recently, the company announced the acquisition of the Technology Solutions unit from Avnet, Inc (AVT) in a cash and stock deal worth $2.6 billion. The major benefit of this transaction will be Tech Data’s access to newer markets, i.e. in the Asia-Pacific region. The deal will expand Tech Data’s reach to 35 countries from the existing 21 countries. The buyout will also strengthen Tech Data distribution capabilities in Europe and the Americas.

Analyst Input

Several brokerages have issued reports on TECD…..

  • Brean Capital reiterated a “buy” rating and issued a $105.00 price objective (up previously from $82.00) on shares of Tech Data Corp. in a research report on Thursday, September 22nd.
  • Northcoast Research began coverage on Tech Data Corp. in a research report on Wednesday, August 10th. They issued a “neutral” rating for the company.
  • Credit Agricole SA upgraded Tech Data Corp. from an “underperform” rating to a “buy” rating and lifted their price objective for the company from $76.00 to $102.00 in a research report on Tuesday, September 20th.
  • Finally, Citigroup Inc. lifted their price objective on Tech Data Corp. from $59.00 to $80.00 and gave the company a “sell” rating in a research report on Thursday, September 22nd.

Two investment analysts have rated the stock with a sell rating, three have issued a hold rating and four have issued a buy rating to the company’s stock. Tech Data Corp. currently has a consensus rating of “Hold” and a consensus price target of $101.

Harvey’s Options Volatility Indicator

Conclusion

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the TECD MAR 17 2017 90.000 call at approximately $3.90. Place a pre-determined sell at $7.80.

Note: No protective stop losses added -- but if you wish to do so make it $1.55.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.

Options traders win because they are successful.

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