Air France-KLM Shares Plunge 5%, Dragged Down by Brent Crude Surge
A sudden halt for the Franco-Dutch airline after its spring rally. The stock is among the biggest losers in the SBF 120 at midday, in a Paris market heavily shaken by new military escalation in the Middle East and the surge in oil prices. Barclays also revised its analysis on the stock this morning.
The stock drops 5% to €13.05 following the Brent surge
Air France-KLM shares fell by 5.02% to €13.05 during the session, down from €13.74 the previous day. This movement is part of a deteriorating sector context: Brent crude jumped by 5.7% to $76.09 a barrel following US strikes against Iran and Tehran's claimed retaliation on military facilities in Kuwait and Bahrain. As kerosene represents a major part of operating costs for airlines, the sharp rise in oil prices weighs on the entire sector: Airbus is down 2.6% and ADP has lost 4.9%. The stock is among the biggest losers in the SBF 120 while the broader index is down 2.23%.
This decline comes after an exceptional run, with nearly 47% gain over three months and a rise of 15% over one month, which leaves room for profit-taking. The stock is retreating towards its 20-day moving average (€12.81), which it still exceeds by 1.87%, while the RSI moves down from the overbought zone to 69. The technical support identified at €10.94 remains distant, about 16% below the current levels.
Barclays raises its target to €12 but maintains an underweight rating
Barclays adjusted its price target on the stock on July 8th, to €12 from €10 previously, while maintaining its underweight rating. The new target set by the British broker remains about 8% below the current price, indicating an implicit downside potential despite today's movement. The stock has also recently benefited from a strengthening of its financial structure, with the successful issuance of a €500 million senior bond on June 25th as part of the EMTN program, following a €1 billion credit line secured in mid-June from twelve international banks.
According to the consensus of analysts surveyed, the stock is trading at about 4 times the expected earnings for the current fiscal year and 2.6 times those of the next fiscal year. The next reference point for investors remains the publication of the group's semi-annual accounts.
