Vallourec Stock Rebounds Despite RSI at 33, Close to Oversold Territory
The seamless tube manufacturer's stock is regaining altitude on Thursday in a Paris market oriented upward. This rebound occurs in a fragile technical context, with the stock remaining below its main moving averages after a decline of more than 24% over three months.
Morgan Stanley Lowers Target but Still Sees Significant Upside Potential
On Tuesday, August 4, Morgan Stanley revised its price target for Vallourec, lowering it from €22.30 to €21.50, while maintaining a "Market Weight" rating. At €19.41, the stock is still trading more than 10% below this revised target, which reflects residual upside potential according to analysts' consensus. The downward revision of the target comes during a period of persistent pressure on the stock, penalized since the publication of half-yearly results on July 30.
These results had revealed a 15% contraction in tube sales volumes in the first half, as well as a decline in EBITDA for the Mines & Forestry segment to $71 million compared to $107 million a year earlier, due in particular to the prolonged closure of the Strait of Hormuz. The group had nevertheless noted that profitability per ton of the Tubes segment increased by 31% to $722/t, and that its net cash position reached $183 million, its highest level since 2009.
Stock Remains Below Moving Averages After Three Months of 24% Decline
Today's rebound, at €19.41, is not enough to erase the underlying pressure. Vallourec is trading below its 20-day moving average (€20.77, a gap of 6.55%), below its 50-day moving average (€21.86, a gap of 11.21%) and slightly below its 200-day moving average (€19.83, a gap of 2.12%): the moving average picture remains uniformly unfavorable. The RSI at 33, close to the oversold threshold, signals seller exhaustion that can technically explain today's recovery, without prejudging its duration. The stock is nevertheless advancing toward its resistance level at €22.11, still far from the current price.
To the downside, the support at €18.73 constitutes the next concrete reference in case of a reversal. For the week, performance remains markedly negative at -8.44%, and the one-year gain (+20.63%) puts into perspective the ground covered since the lows. Brent, at $79.46 per barrel (virtually flat during the session), is not playing an identified trigger role today.
