Emeritus Corporation : The downward trend still dominates
By Bastien Chabasseuil
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
$21.58 | $0 | $22.7 | +100% |
From a fundamental viewpoint, the group has not sufficient quality to hope for a continuation of its bullish trend. Indeed, Surperformance rating largely punishes Emeritus Corporation because of an excessive valuation with an EV/Sales ratio higher than its peers. The deterioration of the financial situation and the increasing leverage for the two next fiscal year emphasize risks. Net Debt/EBITDA ratio at 6.48 should become worst next year at 11.
Graphically, the security is trading in a bearish trend. In the short-term, the stock has rebounded on the USD 18.41 support area toward its mid-term resistance. This rebound seems technical and is not likely to continue. Indeed, moving averages in the long-term are still in a downtrend and that argue for a continuation of the decrease in prices.
The bearish trend and fragile fundamentals let envisage a continuation of the downtrend. An entry point could be fixed close to the USD 21.8 resistance in order to take a short position in Emeritus Corporation. The target price will be the mid-term support area at USD 18.4 and a stop loss order will be placed above USD 21.8. We note that the short term support at USD 20.35 could be used to take some profits.