What to do with a stock that has remained unchanged after a stellar rise in the last 7 months?
The answer to this question is not trivial. Just as it is not trivial to understand the reasons that first led Farmaè to be among the best in Piazza Affari and, subsequently, to make it an anonymous title that vivacchia without giving any interesting ideas.
The summary of what is expressed is shown in the following figure which shows the performance of the stock for different time frames.
We immediately notice how the performance of the last year and that from the beginning of the year are practically identical with an increase of about 110%. If, on the other hand, the time horizon is narrowed from 6 months downwards, we note how the performance, although not excessively, was negative.
Yet the company reported a good half year as shown by the following data. The company reported a solid first half result with reduced losses, better revenues and better expense control.
Revenues: 40.1 million euros (up by 27% compared to the first half of 2020).
Net loss: 129.9k euro (loss reduced by 56% compared to the first half of 2020).
Despite these data, however, the valuation of the stock, at least according to market multiples, is still excessive. Whatever the indicator used, in fact, Farmaè is overestimated.
What to do with a stock that has remained unchanged after a stellar rise in the last 7 months? The indications of the graphic analysis
The stock title Farmaè (MIL:FAR) closed the session on 12 October down by 0.63%, marking a last price at 31.3 euros.
Weekly time frame
The current trend is bearish, but for many weeks the prices have been locked within the trading range of 30.3 euros – 32.3 euros. Only the break of one of these two levels could give direction to the prices.
That the situation is not the clearest is also evident from the fact that despite the buy signal of the Swing Indicator, the prices are unable to recover.
Should the prices accelerate downwards, the objectives are those indicated in the figure. In particular, we note that the 27.4 euro area has already in the past slowed down the decline and favored the rebound in prices.
On the upside, however, the closest target is in the 45 euro area.
To answer the question of the title, it is necessary to wait for the breaking of one of the two levels indicated before taking a position on Farmaè.
Initial bullish signs but the danger of further declines has not yet escaped