TrueCar, Inc. (TRUE) shares rose more than 15% during Wednesday session after B Riley upgraded the stock to Buy with a target price of $5.00 per share. Analyst Lee Krowl considers the reduction of costs, product initiatives, and cash to provide a “good setup” for the stock. While TrueCar still manage macro volatility and the loss of the USAA as its main Affinity partners, recent industry data points to strengthen the automobile sales bottomed in April and improved throughout May.
At the end of May, TrueCar reported earlier that the pre-COVID online motor vehicle sales go into the Memorial Day weekend. The purchase intent for new vehicles in comparison with used vehicles increased 9% in the post-COVID-19 period. The trends suggest that there may be pent-up demand for autos in the united States in the wake of the COVID-19-driven by the lock-in measures.
During the first quarter, TrueCar sales fell 2.5% to $ 83.5 million, beating consensus estimates by $ 1.5 million. Non-GAAP net income of four cents per share beat the consensus estimates by eight cents per share.
From a technical point of view, the stock, the stock briefly broke out from the 200-day moving average and prior highs of around $3.48. The relative strength index (RSI) is approaching overbought levels with a reading of 67.64, but the moving average convergence divergence (MACD) remains in a bullish trend. These indicators suggest that the stock could see a consolidation before resuming its upward movement.
Traders should watch for consolidation around the 200-day moving average and prior highs of close to $3.48 in the coming sessions. If the stock breaks out, traders could see a trend to the trend line resistance at around $4.00, or a move to retest 52-week highs of $5.66. If the stock breaks down, operators could see a trend in the trendline of support near $3.00 or the 50-day moving average at $2.51.
The author holds no position in the stock(s) mentioned except through the passive management of index funds.