Nuance Communications, Inc. : A resistance as obstacle
April 05, 2013 at 02:29 pm
By
Entry price | Target | Stop-loss | Potential |
---|
US$20.81 |
US$0 |
US$22.9 |
+100% |
---|
The share is reaching a technical resistance and could begin a bearish trend.
From a fundamental viewpoint, firstly, we note the high valuation of the company. The valuation ratio of 3.54x, the group appears overvalued compared to its business activity.
From a technical viewpoint, the proximity of the USD 21.9 medium-term resistance limits the upside potential on the stock. The uptrend in the short term could be stopped by this level and prices could decrease sharply in the coming sessions. Technical indicators also show an overbought situation that reinforces this bearish scenario. Thus, there is a higher downside potential than upside.
Therefore, the proximity of mid-term resistance suggests a consolidation or a correction phase in the coming sessions. The most offensive will take a short position close to USD 21.9 to target a return on the USD 19.8. He should protect the position with a stop loss set above USD 21.9.
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