Air France-KLM Shares Soar Over 4%, Boosted by Brent's Drop
The Franco-Dutch airline's stock continues its rally in the mid-afternoon, driven by a sharp easing of the barrel following the US-Iran framework agreement. The stock crosses a new technical threshold and confirms its upward momentum from recent weeks, as the airline sector fully benefits from the energy pullback.
Brent Below $85 Lightens Fuel Bill and Propels the Stock
Air France-KLM shares gained 4.26% to €12.36 during the session, within an SBF 120 up by 1.04%. The movement follows the drop in Brent, which fell by 3.48% to $84.29 per barrel after the announcement of a framework agreement between Washington and Tehran foreseeing the gradual reopening of the Strait of Hormuz. The barrel has lost 11.4% since June 4, which mechanically eases the kerosene bill for airlines. Airbus is up 4.08% and ADP has advanced 3.10%, indicating a broad sectoral movement in air transport and aerospace.
The company is making strong progress within the SBF 120, extending a rebound of 22.1% over a month and 50% over a year. The rally continues after a nearly 9% jump in the previous session, which had allowed the stock to break the resistance at €11.74. Today's progress validates this breakthrough and sets the stock on a new level.
RSI at 68 Reflects the Intensity of the Rally, the Stock Widens the Gap with its Moving Averages
The price is now 12.3% above the MM20 (€11.01) and 20.7% above the MM50 (€10.24), a gap that reflects the steepness of the movement initiated at the end of May. The RSI at 68 is approaching the overbought zone but is not there yet, allowing some technical leeway. The next identified resistance is at €13.14, about 6% above the current price.
Regarding valuation, according to the consensus of analysts surveyed, the stock is trading at about 3.7 times the earnings of the current fiscal year and 2.5 times those of the next fiscal year, a typically low benchmark for the sector. For the record, Morgan Stanley had turned bullish at the end of May with a target of €11.50, now surpassed by the price. The holding of the €11.74 threshold reconquered last Friday will be the reference to follow in case of consolidation.
