Can E.ON shares recover from this collapse?
7th July 2022 07:44
After a slump to multi-year lows that was both swift and dramatic, independent analyst Alistair Strang looks to see if a broker's view may be too ambitious.
Our weekly trawl through European shares was made easy when a respected analyst decided to start the week with a €12.5 target for E.ON SE (XETRA:EOAN).
We’ve hesitated a few times recently when considering running an analysis as the visuals were not great. Now, we’re wondering if the analyst has rose tinted glasses!
Energy giant E.On, trading in 13 countries across Europe and over 30 worldwide, appear to be trying hardest in the renewable sector. Unfortunately, a glance through Google News reveals customer service remains a particular sector the company fails to excel in; quite the opposite it seems, as they were recently ranked in the bottom four suppliers due to their treatment of consumers.
Their share price, doubtless due to Ukraine, now appears to be setting itself up for some dramatics, taking aim at a direction quite the opposite of that mooted by the respected analyst.
Presently trading around the €8 level, weakness now below €7.7 looks very capable of promoting reversal down to an initial €7.3, along with slight hope of a short lived bounce.
Past performance is not a guide to future performance.
However, should €7.3 break, our secondary calculates at €6.6, matching the lows from five years ago, and doubtless causing a proper rebound, if only due to the number of folk glancing at a chart.
We do have a cautionary note should €6.6 break, as we can work out an “ultimate bottom” level down at €5.5, a level at which the price almost must recoil.
We’re lacking in confidence that any rebound shall enjoy sufficient force to reach JPM’s target of €12.5.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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