These three major European companies boast strong, profitable balance sheets, yet their stock prices continue to decline.
In the European stock market, some prominent companies are experiencing a contraction despite their solid fundamentals and well-established reputations in their respective sectors.
In this context, three stocks stand out.
When examining their balance sheets for 2024, the reasons for their notoriety, the factors that contribute to the recent decline in their shares and by making a graphical analysis of their market performance, interesting evidence emerges.
Let’s talk about Novo Nordisk, ASML and Porsche AG. Will the price of these shares ever recover?
Novo Nordisk: leader in the treatment of obesity
Novo Nordisk, a Danish pharmaceutical company, has become globally famous thanks to its innovative drugs for the treatment of obesity, in particular Ozempic and Wegovy.
In the third quarter of 2024, the company reported net income of DKK 27.3 billion (approximately $3.66 billion), an increase of 21% compared to the previous year.
Wegovy sales reached DKK 17.3 billion, marking a 48% increase compared to the previous quarter.
Despite these positive results, Novo Nordisk shares declined. This decline was attributed to several factors, including increasing competition in the anti-obesity drugs sector, particularly from Eli Lilly, and concerns about the company’s ability to meet growing demand.
In addition, political pressure to reduce drug prices contributed to uncertainty among investors.
The Novo Nordisk stock chart analysis shows a downward trend in recent months, with the share price recording a significant decrease from the all-time highs reached at the beginning of the year, by almost 30%.
Technical indicators, such as the RSI, point to a phase of weakness.
The oscillator indicates 42 points, heading towards the oversold zone, the 30 points.
ASML: Pioneer in the production of semiconductor machinery
ASML, a Dutch leading manufacturer of lithography machinery used in the production of semiconductors, has benefited from the growing demand related to artificial intelligence. In the third quarter of 2024, ASML reported total net sales of €7.5 billion and net income of €2.1 billion.
However, quarterly net bookings were €2.6 billion, below analysts’ expectations.
The decline in ASML shares is attributed to a combination of factors, including lower orders from key customers such as Intel and Samsung, and restrictions on sales of advanced instruments to China.
Although the long-term outlook remains positive, with the company forecasting annual revenues of between €44 billion and €60 billion by 2030, short-term uncertainties have negatively affected investor sentiment.
The ASML stock chart shows a phase of volatility, with significant price swings in recent months.
After peaking mid-year, the stock has corrected, testing critical support levels, such as the current one, near €600. Again, the RSI is close to the 30-point threshold, a level it has not touched on a weekly timeframe in over 15 years.
Porsche AG: Icon of Automotive Luxury
Porsche AG, a renowned German car manufacturer, is synonymous with luxury and high performance. In the third quarter of 2024, the company reported an operating profit of €4.04 billion, with an operating margin of 14.1%. Despite these results, Porsche shares have declined, influenced by several factors.
A comparison with Ferrari reveals significant differences in valuation multiples. Porsche AG shares are trading at around 16 times expected earnings, while Ferrari is valued at 48 times earnings, reflecting a more favorable market perception for the Italian brand.
The decline in Porsche shares is partly attributable to its relationship with Volkswagen, which holds a significant stake in the Stuttgart-based company.
Volkswagen’s financial and operational difficulties have had a negative impact on Porsche, affecting investor sentiment.
In addition, the contraction in the China market, an important sales area for Porsche, has contributed to the decline in sales and pressure on margins.
The Porsche AG stock chart is showing a downward trend, with the price having broken several support levels in recent months and now dealing with the €60 level. Technical indicators suggest a phase of weakness, with the stock having already touched the overbought level in the RSI indicator in June 2024.
Why are these European companies not growing on the stock market?
It is often a clear paradox to see companies with positive and growing profit margins suffer declines in their stock prices.
However, this is exactly what is happening in these cases. The reason is that, despite being profitable companies, the forecast decline is for next year’s growth rate, influenced by the strong expansion recorded this year.
In the case of Novo Nordisk, the slowdown is attributable to increased competition in the sector. In the other two cases, however, the contraction derives from an economic slowdown in one of the main trading partners: China.
Original article published on Money.it Italy 2024-11-23 20:19:00. Original title: 3 azioni europee da monitorare con molta attenzione
