LEGRAND Stock: Significant Decline Over the Week Following Quarterly Results Below Expectations
Legrand's stock experienced a significant correction over the last five sessions, reacting to the publication of financial figures deemed disappointing by the market. This decline is part of a profit-taking context in a stock that had particularly shone since the beginning of the year. Over the same period, the benchmark Paris indices showed much smaller declines.
Weekly Performance and Market Context
Legrand's stock closed the week at €129.85, marking a sharp weekly decline of 12.59%. This drop contrasts with the annual performance of the stock, which remains largely positive at +23.84% over the past twelve months. In the same week, the CAC 40 and the SBF 120 respectively fell by 2.54% and 2.6%, highlighting the magnitude of the specific bearish movement in the stock. The correction comes after several months of sustained growth for Legrand, driven by the growth of the data center market and early signs of a recovery in the construction sector in Europe. Legrand also benefited from very high expectations related to the boom in artificial intelligence, which boosts demand for electrical and digital infrastructure equipment. Since the beginning of the year, the stock was even among the strongest gains in the CAC 40. The retreat this week is all the more notable as it was accompanied by increased volatility, with the monthly indicator reaching 14.22.
Consolidation Triggered by Quarterly Results
This consolidation phase was triggered by the publication of third-quarter results, perceived as disappointing by operators. The quarter's revenue amounted to €6.97 billion, below expectations (€7.03 billion), while the adjusted operating margin came out at 20.6%, a level lower than forecasted. Despite solid organic growth (notably in the United States, where data center-related activity showed a 14.4% increase), profitability in Europe and the level of financial costs weighed on the overall perception of the accounts. The adjustment of market expectations thus fueled the decline in the stock in immediate reaction to the publication. However, Legrand maintains its previously unveiled annual targets, with expected revenue growth between 10% and 12%, and an adjusted operating margin aimed within the range of 20.5% to 21%. Furthermore, at the end of the week, the group announced the upcoming implementation of a buyback plan for a maximum of 500,000 own shares.
Technical Analysis Perspective
From a technical analysis perspective, the stock closes below its short-term (50 days at €141.43) and long-term (200 days at €117.32) moving averages. The stock is now slightly above its main support level identified at €129.25, while remaining well below its resistance zone, set at €150.20. The RSI indicator is at 23, indicating a movement in an oversold zone. The negative MACD line at -1.34 points towards an unfavorable short-term trend. The Bollinger Bands, tightened (lower bound at €134.18, upper bound at €156.58), reflect the recent increase in volatility as the stock now tests major technical levels after its decline.
