First signs of a reversal

10/06/2017 | 07:54am

Shares in Lanxess show a deteriorated chart pattern with the risk of a trend reversal. A phase of declining share prices seems to establish itself.

Strengths

● The company has attractive valuation levels with a low EV/sales ratio compared with its peers.

● Over the last twelve months, the sales forecast has been frequently revised upwards.

● Within the weekly time frame the stock shows a bullish technical configuration above the support level at 61.51 EUR


Weaknesses

● The share is close to its long-term resistance in weekly data. Therefore, the potential should be limited. However, a further bullish movement when crossing this resistance will be a positive signal.

● As estimated by analysts, this group is among those businesses with the lowest growth prospects.

● Prospects from analysts covering the stock are not consistent. Such dispersed sales estimates confirm the poor visibility into the group's activity.

● The group usually releases earnings worse than estimated.

● With a 2017 P/E ratio at 27.86 times the estimated earnings, the company operates at rather significant levels of earnings multiples.

● For the last four months, earnings estimated by analysts have been revised downwards with respect to the next two years.

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