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by Darius Anucauskas

A Dimmed Near-Term Outlook For The Legrand SA Stock

One of the largest global players in the electrical switch market, Legrand SA (EPA: LR), was also impacted by this year’s coronavirus outbreak and the drastic lockdown measures which took place after. Legrand SA is an old French electric wiring devices company, which dates back to the end of the 19th century. Certainly, the firm continues to keep up with the current market trends and tries to diversify its products, jumping into sustainable development and energy saving technologies. From energy efficiency to home comfort, and then from office infrastructure to supplying data centres with their electric production, the company still has where to grow. However, due to the pandemic, sales have dropped -12.2% in the first half of the year, resulting in a decline in net profit for the same period. Because Legrand showed bad results, it may continue sliding in the short-run, due to the fact that there are prospects for a second lockdown. That said, overall, the company says that it is quite optimistic in its future, despite the strong competition from key players such as Schneider Electric SE (EPA: SU), Siemens AG (ETR: SIE) and ABB Ltd (NYSE: ABB).

The current technical picture on the LR chart suggests that there could be more downside to come in the near term. The stock had recently taken a plunge, breaking below some of its key support areas and also ending up falling below all of its EMAs on our daily chart. Such a move might keep some new buyers from entering, which may prevent the near-term outlook on the negative side, at least for now.

A drop below the current low of this week, at 65.68, could bring the price down to the lowest point of August, at 64.46, which might provide a temporary hold-up. If LR is still struggling with finding new buyers at that price, a further decline may set the stage for a move to the 62.90 obstacle, or even the 60.36 level, marked by the high and the low of June 15th.

The MACD is currently indicating negative price momentum, as the indicator is below zero and its trigger line. However, the RSI is showing a slowing downside speed of the price, as the oscillator sits below 50, but currently points a bit higher. That may support the idea of waiting for a break below the 65.68 area first, before aiming lower.

In order to get comfortable with the upside again, ideally, we would prefer to wait for a push back above the 72.46 barrier, marked by the highest point of August. Such a break would confirm a forthcoming higher high, possibly inviting more buyers into the game. The stock may drift to the 74.62 obstacle, a break of which could clear the way to the 76.20 hurdle, marked the inside swing lows of February 17th, 18th and 19th. LR might stall there for a bit, but if the buyers are still feeling comfortable, the next potential target could be the stock’s all-time high, at 77.92, reached in February this year.

Legrand-Daily

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