Barnes & Noble Education, Inc. (BNED) shares rose more than 15% during Friday's session as traders focused on the digital side of its business. With the COVID-19 pandemic causing more schools to transition online, investors have been looking for opportunities to invest in digital education companies that could benefit from the transition over the coming quarters.

Needham reiterated its Buy rating and $4.00 price target on Barnes & Noble Education shares earlier this week, saying that about 80% of the company's university partners expect to conduct classes on campus via a hybrid model. The analyst also cited the company's strategic relationship with universities and its suite of digital assets that could pave the way to more stable-than-expected revenue.

Last quarter, the company reported revenue that fell 23.2% to $256.89 million, beating consensus estimates by $36.35 million, but GAAP net losses of 84 cents per share missed consensus estimates by 36 cents. Management said that it is rapidly adapting its assets and offerings to respond to the extraordinary challenges facing the market.

Chart showing the share price performance of Barnes & Noble Education, Inc. (BNED)
TrendSpider

From a technical standpoint, the stock broke out from reaction highs toward its 200-day moving average at $2.92 per share. The relative strength index (RSI) moved toward overbought levels with a reading of 65.28, but the moving average convergence divergence (MCAD) remains in a bullish uptrend. These indicators suggest that the stock could see greater upside ahead.

Traders should watch for a period of consolidation over the coming sessions before a potential breakout from the 200-day moving average at $2.92 toward prior highs of around $4.00. If the stock fails to break out, traders could see some consolidation between the 200-day moving average and the 50-day moving average and trendline support near $1.67 over the near term.

The author holds no position in the stock(s) mentioned except through passively managed index funds.