Beazer Homes USA, Inc. (BZH) is a U.S. home-builder with operations in 16 states across the country. The company’s stock is currently trading around $22.20 in a 52 week range of $13.91-$25.34. The stock has been solid over the past 12 months with shares rallying just under 17% over that time. BZH is set to report first quarter earnings before the open tomorrow with analysts expecting BZH to post a loss of $0.25 per share eon revenues of $278 million. Over the past 8 quarters the stock has rallied 5 times on earnings day and sold off only 3 times. On average BZH moves around 5.6% on earnings day. The options market is currently implying a move of around $2.20 by February expiration giving us an upside target around $24.40. Shares of BZH are also trading above the Ichimoku Cloud, indicating the stock is trading in bullish territory. With strong historical performance and a bullish chart setup we believe that BZH is setting up well for a long into earnings.  We will likely look to enter front month call spreads in BZH with the Feb 23-24 or 24-25 call spreads presenting good value here. Waiting until after the Fed meeting is key today as broader markets are likely to swing on the release.

The Trade: Buy BZH at $22.18
Stop Loss: $19.18
Target #1: $22.68
Target #2: $23.68
Target #3: $24.68
 
If I get filled in Target #2, I move Stop to Breakeven
Andrew Keene

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