Soitec Stock Falls 5%, Below Its Resistance Level
Soitec is lagging at the bottom of the SBF 120 this Thursday, as the stock approaches a key resistance level at €146.35 in a deteriorating market context. Selling pressure follows an exceptional rally since early September, while Bernstein has just raised its price target and the ECB decision expected today adds uncertainty to technology valuations.
Worst Performer in the SBF 120 as the Stock Nears Its €146.35 Resistance
The Soitec share loses 5.2% in trading at €136.80, marking the biggest decline in the SBF 120 in an index that is also down 0.31%. The decline comes after unsuccessful attempts by the stock to break through its resistance at €146.35 in previous sessions, despite a gain of over 22% in the past week. This technical ceiling apparently triggered profit-taking after a spectacular climb: the raise in its Q2 growth forecasts, announced in early September and based on accelerating Photonics-SOI demand, had propelled the stock up 14% on September 3rd and then 4% on September 4th.
Despite today's correction, Soitec remains well above its moving averages: the 20-day MA is at €120.66 (outperformance of +13.4%) and the 50-day MA at €112.16 (outperformance of +21.97%), which reflects the magnitude of the move accomplished in barely two weeks. The RSI at 68 remains close to the overbought zone without firmly entering it, a configuration consistent with a stock weakening under its resistance after a rapid uptrend phase. The overall market context is also unfavorable: the DAX loses 1.69% in trading, the FTSE 100 loses 1.09% and the VIX jumps 12% intraday, a sign of increased nervousness in markets.
A Target Raised by Bernstein, but a Valuation That Questions the Consensus
On Tuesday, September 8th, Bernstein raised its price target on Soitec from €200 to €215, while maintaining an outperform rating. At €136.80, the stock displays a theoretical upside potential of nearly 57% relative to this target, which testifies to at least one research house's confidence in the group's fundamental trajectory. Yet, the valuation reached by the stock after its 331% surge over one year raises questions: according to the consensus of analyzed analysts, the stock is trading at approximately 41.8 times the expected earnings of the following fiscal year, a multiple that leaves little room for error should demand for semiconductor substrates disappoint.
This context of tight valuation is moreover part of a more demanding macro environment: the ECB holds its meeting on Thursday, September 10th, with markets pricing in almost entirely a 25 basis point increase in the deposit rate to 2.50%, a tightening that could weigh on the multiples of growth stocks. The resistance at €146.35, which Soitec is hitting without breaking through today, remains the level to watch to confirm or invalidate the upward dynamic underway since early September.
