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Fan Yang

Carbonite Inc. (CARB) Cracking Key Support Despite Topping Earnings

Carbonite $CARB reported better than expected earnings, but fell sharply. Let's first look at a summary of the earnings report from Nasdaq.com:

Carbonite (CARB) Tops Q2 Earnings Estimates

Carbonite (CARB) came out with quarterly earnings of $0.56 per share, beating the Zacks Consensus Estimate of $0.47 per share. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 19.15%. A quarter ago, it was expected that this cloud computing company would pos t earnings of $0.37 per share when it actually produced earnings of $0.44, delivering a surprise of 18.92%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Carbonite, which belongs to the Zacks Computer - Services industry, posted revenues of $135.05 million for the quarter ended June 2019, missing the Zacks Consensus Estimate by 0.19%. This compares to year-ago revenues of $77.73 million. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.


CARB Weekly Chart

(click to enlarge)

Bearish Reaction:
- After the Q2 earnings report, the market is selling CARB in after-hour trading.
- CARB was bearish since September 2018 after pushing to $43. After falling to $22.50, price consolidated for the most part in 2019.
- However, despite the stronger-than expected earnings report, price is continuing this bearish correction. 
- Price is cracking $20. 
- The $20.50-$21 support is key. This is right around the 200-week simple moving average (SMA).
- This area also involves the 2018-low. This is a critical support indeed.
- If price does indeed break and stay under $20, there is potential downside to the $15.45-$16.25 area.
- This area could prove to be critical support after being a critical resistance for years since CARB's IPO.
- If price starts to find resistance around $22.50-$23, I would be more confident of the bearish scenario-

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