Mapfre’s shares shook off the downward pressure of recent sessions and the doubts generated among investors about the prospects for the car market in Spain and Brazil.
The insurer is listed at just 1.7 percent of the 1.9555 euros, a relevant area whose overcoming could accelerate progress, with the annual maximums in the spotlight.
The Spanish listed company was hurt by a recent report in which Swiss credit predicted a worse performance in the market than its competitors due to the prospects of a worse evolution of the automobile business in Spain and Brazil.
However, the sources consulted by finanzas.com explained that, although the problem exists, the situation for Mapfre not alarming either.
What’s more, the company is well positioned to meet the net profit guidance it promised the market in its upcoming results on February 10. The goal is to achieve 700 million euros, a figure that analysts see as feasible.
The problems for Mapfre are not alarming
It is clear that “the problem that the automobile sector is having with suppliers and bottlenecks has caused the sector to slow down and car sales have fallen,” he told finanzas.com Nuria Alvarez, Analyst of Income 4 Bank.
Prospects “remain weak and this affects companies like Mapfre, since an important part of their business is in car insurance,” this expert acknowledged.
Now, the situation “is not cause for alarm because in the end they are still conjunctural cycles” and will be reversed when the bottlenecks disappear, added this expert.
In fact, this year there will be no negative surprises in this regard. Thus, the consensus of analysts of finanzas.com calculates that Mapfre will be able to achieve its goal of reporting a net profit of 700 million euros in 2021.
The Spanish insurer published revenue figures on January 17, which “show a total increase in written premiums of 8.6 percent in 2021, which may help boost profits,” explained analysts at Bloomberg Intelligence.
In the opinion of Diego Morín, an IG analyst, other catalysts for Mapfre are still interesting, such as the income diversification you have in your business, as well as your balance sheet and solvency ratios.
The key in Mapfre is to exceed 2 euros
With calmer waters regarding Mapfre’s prospects, the truth is that the stock continues to project interesting rebound prospects, according to the sources consulted by finanzas.com.
“The resistance zone is at 1.9555 euros, which coincides with a support zone that was tested in August 2019,” said the magazine’s director of analysis INVESTMENT, Josep Codina. And up to that level, there is barely a distance of 1.7 percent.
Overcoming this zone is important. First, because it would nullify a double top pattern, it has strong bearish implications.
The confirmation of this annulment would come “with the overcoming of 2 euros”, Codina added, to then attack the next zone of objectives that Mapfre has, at 2.2 euros.
The annual maximums of Mapfre, in the spotlight
At the moment, “there is no risk in the value as long as it does not lose the average of 200 sessions, which is projected at around 1.78 euros,” he added. Codina.
It has the highest support at 1.7 euros. Losing this zone would complicate the short-term outlook, since the drop target would be at 1.4 euros, where Mapfre has another larger support zone.
A filter could even be given to the drop to 1.6 euros so that the rebound options remain intact.
“If investors continue to maintain the support of 1.60 euros, some testing of the annual highs would be likely, with an eye on business results for the last quarter,” added Morín.
In any case, Mapfre’s revaluation potential of 12 percent contrasts with the income projections maintained by the consensus of fundamental analysts, which indicates that the stock still has ground to recover, the sources consulted explained.