Merck KGaA : Major resistance to break
By Camille Chretien
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
€120.7 | €125.4 | €118.9 | +3.89% |
The company benefits from recent upward revision in earnings per share for this year and 2014. Thus, the net profit may double in 2013 to reach a net margin of 10.4% compared to 5.3% last year. Further, the firm is financially healthy with a low financial leverage (net debt/EBITDA) of 0.65x in 2012.
Technically, the trend is bullish in the medium and long term with well-oriented weekly moving averages. After a slight decrease, prices sharply bounced on the EUR 115 support. A breakout of the EUR 120.7 resistance and the 50-day moving average, may occur in the coming trading session, and would confirm the rebound and allow the security to come back to its recent highs, around EUR 125.4.
As a consequence, it seems opportune to monitor the breakout of the EUR 120.7 short term resistance to take a long position in Merck. The first objective will be EUR 125.4 then EUR 130 by extension. A stop loss must be placed just below EUR 119.