DE40: SMA Solar drops 28% after lowering 2024 forecasts 📉

• DAX loses slightly during Wednesday's session
• Attention turned to SMA Solar shares losing 28%
• Jefferies raises outlook for GEA Group

Overall market situation:

Wednesday's session on the German trading floor saw moderate declines in the DAX index, which reached nearly 0.2%. The session on the Old Continent is not overly optimistic today, although there is no talk of supply pressure at the moment either. The situation on this dimension looks much worse in France, where the CAC40 there subtracted another 0.4%. 

The company that is attracting most investor attention today is SMA Solar. Its shares are down nearly 28% after it cut its earnings forecasts for the year. The session on Wall Street will not take place today due to the bank holiday. 

Volatility currently observed in the DAX index. Source: Bloomberg Financial LP

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

The German benchmark DE40 is down nearly 0.3% during today's session. The index is still in the structure of the downtrend initiated on 16 May. The continuation of the downward trend led to a test of the historically important support level in the zone of the 100-day exponential moving average (purple curve on the chart, it still remains a key support point). Locally, the most important resistance all the time remains the zone of the 50-day exponential moving average (blue curve).

Interestingly, the test of the zones of the aforementioned 100-day EMA brought a clear activation on the volume side. This may indicate that we have seen a lot of institutional investor activation in this zone. Source: xStation 

News: 

GEA Group (G1A.DE) shares gain 3.7% after Jefferies upgraded its recommendation to 'buy' from 'hold', based on an expected increase in agricultural machinery orders. The valuation seems cheap for the company with the potential for an organic CAGR of 4%-6%, an Ebitda margin of several percent and an ROCE of 45% by 2029. Target price set at €52.

SMA Solar (S92.DE) shares are down close to 30% today following the downgrade of earnings forecasts for 2024. As reported by the company, the reason for the forecast revision is the continued volatility in the market, as well as a delayed increase in incoming orders due to persistently high inventories at distributors and installers. The decline seen today is the largest in 12 years. 

ANNUAL FORECAST

Ebitda forecast from €80m to €130m, previously estimated from €220m to €290m

Sales forecast: €1.55bn to €1.70bn, previously estimated between €1.95bn and €2.22bn

The company's shares are trading at their lowest levels since 2022. Source: xStation 5

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