DE40: DAX above key support zone, Philips gains nearly 9.5% 📈

• Slight improvement in sentiment at the start of the week
• Philips gains 9.5% after reporting quarterly results 
• Merck KGaA raised its full-year earnings forecasts

Overall market situation:

This week's first session in European stock markets brings a further attempt to calm sentiment after the relatively turbulent movements seen last week. However, this attempt may only be a short-lived phenomenon, as the week is filled with both the quarterly results of the largest listed companies in the US, as well as a series of central bank decisions on interest rates. Germany's DAX is currently gaining 0.35% on an intraday basis. At the same time, France's CAC40 is losing 0.25%. 

Volatility currently observed in the broad European market. Source: xStation 

Germany's benchmark DE40 is trading nearly 0.15% higher during Monday's session. The index keeps trying to stay above the key support level set by the 100-day EMA (purple curve on the chart). Breaking through the bottom of this zone and closing the intraday candle below could open the way to deeper declines marked by the abolition of the 23.6% Fibo of the downward channel set by the upward impulse initiated in October 2023. The main resistance level remains the historical peak at 19,000 points. Source: xStation

News: 

Merck KGaA (MRK.DE) shares are gaining 3.5% after the company raised its full-year outlook, citing strong demand for its pharmaceutical and electronics businesses. The company will release its final Q2 results on August 1.

PRELIMINARY RESULTS FOR THE SECOND QUARTER

• Preliminary net sales in Q2. 5.35 billion euros, estimate. 5.23 billion euros
  Preliminary adjusted EPS for 2Q. 2.20 euros, estimate. 2.01 euros
  Preliminary adjusted EBITDA for 2Q. 1.51 billion euros, estimate. 1.42 billion euros

ANNUAL FORECAST

• Forecast net sales of 20.7-22.1 billion euros, previously estimated 20.6-22.1 billion euros, analysts expected 21.3 billion euros.
• Forecast adjusted Ebitda of 5.8 billion euros to 6.4 billion euros, previously estimated 5.7 billion euros to 6.3 billion euros, analysts expected 6 billion euros.
• Forecast adjusted EPS of 8.20-9.30 euros, previously estimated 8.05-9.10 euros, analysts expected 8.64 euros.

Philips (PHIA.NL) shares are gaining as much as 9.3% today, the most in three months, after the Dutch medical device maker reported second-quarter results, with orders rising for the first time in two years. 

SECOND QUARTER RESULTS 

• Adjusted Ebit 495 million euros, +9.3% y/y, estimated 426.3 million euros
• Adjusted Ebit margin 11.1% vs. 10.1% y/y, estimated 9.63%
• Comparable sales +1.5%, estimated +1.07%
• Sales €4.46 billion, -0.2% y/y, estimated €4.45 billion
• Operating income €816 million vs. €221 million y/y, estimated €1.04 billion
• Comparable order intake +9% vs. -8% y/y
• Net income 451 million euros vs. 72 million euros y/y, estimated 505 million euros
• Income from continuing operations €311 million vs. €74 million y/y, estimated €453.4 million
• Adjusted earnings per share from continuing operations €0.30 vs. €0.27 y/y, estimated €0.30

ANNUAL FORECAST

• Comparable sales still in range of +3% to +5%, analysts expected +4.06%
• Still expects adjusted Ebit margin of 11% to 11.5%, analysts expected 11.9%.
• Still expects free cash flow of 900 million to 1.1 billion euros.

Analyst action:

• Santander raised shares of Zalanado (ZAL.DE) to an “outperform” rating. Target price at 31.20 euros per share. 
• BNPP Exane upgraded Aixtron (AIXA.DE) to a “neutral” rating. Target price at 20 euros per share. 
• Morgan Stanley downgraded shares of Evotec (EVT.DE) to “outperform” in view of the lack of clarity on further business momentum. 

Other news coming out of individual companies in the DAX index. Source: Bloomberg Financial LP