Danone stock retreats further and threatens a key support level at €65
The food giant is extending its post-results decline and moving against a firmly rising CAC 40. The share continues its pullback following a half-yearly publication, with the market particularly focusing on the sharp fall in free cash flow, even as analysts raise their price targets.
The share settles below its 20-day and 200-day moving averages following the post-results decline
The Danone share falls 2.61% to €68.74, while the CAC 40 gains 1.03% during the session. The share thus extends the drop of more than 4% recorded the previous day, bringing the monthly decline to nearly 4.6%. The technical configuration has deteriorated significantly: the price is now trading below the 20-day moving average at €72.03 (a gap of -4.57%) and the 200-day moving average at €71.23 (-3.50%), maintaining only a thin cushion above the 50-day moving average at €68.24.
The RSI at 50 remains neutral, leaving the door open for a continuation of the decline towards the technical support identified at €65.06. The share ranks 34th in the CAC 40 during the session, moving against the rest of the index where Schneider Electric, Bouygues and Société Générale surge more than 6%. This underperformance completely erases the rebound of more than 2% achieved on Monday before the publication.
A decline in cash flow that weighs despite raised price targets
The market sanction follows the half-yearly publication of July 29, marked by revenue of €13.9 billion (+3.5% on a comparable basis) and an operating margin of 13.3%, but above all by a 27.3% decline in free cash flow to €852 million. This gap between operational performance and cash generation explains the cautious market reading over two consecutive sessions. The analysts' consensus nevertheless remains more constructive than the stock market reaction.
Morgan Stanley raised its target today from €80 to €83, maintaining an Overweight rating, while Goldman Sachs raised its target from €75 to €76 while maintaining a market perform opinion. The two new targets stand respectively 20.7% and 10.6% above the current price. The support level at €65.06, aligned with the lower bound of the recent trading range, is the next technical level to watch.
