As perhaps one might have expected, the outbreak of the invasion of Ukraine by Russia gave a very strong bullish impulse to Leonardo’s prices. Suffice it to say that in the last 3 months the stock has been the best among the largest capitalization stocks with an increase of about 47%. Now, however, attention must be paid to a possible retracement on the Leonardo stock.
As can be seen from the graph, in fact, the prices have reached the maximum bullish extension in the 9.72 euro area and, after an overshooting phase, are showing a weakness that should not be overlooked. Especially in light of the weekly close of less than 9.72 euros. At this point, in fact, prices could easily reach the most probable target in the 9.368 euro area (1st price target). On this level, then, the future of the former Finmeccanica will be decided. A weekly close below this level, in fact, could open the doors to a continuation of the descent to the 8.5 euro area. A closing below this level, then, could bring the stock down to its maximum extension in the 7.5 euro area.
The bulls, on the other hand, must trust in the stability of the support in the 9.4 euro area. In this case, in fact, the conditions could be created for a powerful bullish reversal whose most probable target could be the 15 euro area. It should be noted that the Leonardo stock has not seen these prices for about 5 years.
The evaluation of the Leonardo title
Despite the sharp rise in the last three months, the stock is still undervalued. Whatever the indicator used, in fact, the valuation based on market multiples expresses a strong underestimation. The fair value, calculated using the discounted cash flow method, then, expresses an undervaluation of over 60%. Finally, the stock has a very low valuation level, with a company value estimated at 0.58 times its turnover.
According to what is reported in international journals, the average opinion of analysts is buy with an average target price that expresses an undervaluation of around 25%.
Attention to a possible retracement on the Leonardo stock: the indications of the graphic analysis
Leonardo Finmeccanica (MIL: LDO) closed the session on May 13 with an increase of 0.46% compared to the previous session at 9.58 euros.
Weekly time frame
Strong rebound in markets as expected by setups, but not sustained upside yet