Netcare Limited’s (JSE: NTC) positive financial performance amidst challenging conditions marks its resilience. The 2023 fiscal year witnessed a revenue surge of 9.5%, with profit after tax soaring by 27.2%. Encouragingly, the group anticipates revenue growth between 7.5% and 9.5% in 2024 despite prevailing macroeconomic hurdles.
CEO Richard Friedland highlighted the impressive operational leverage despite inflationary pressures, grid failures, and soaring interest rates. Measures to mitigate challenges include efficiency enhancements amid rising input costs. Market sentiment towards Netcare is favourable post-COVID-19, with normalized patient volumes bolstering financial normalization.
However, Netcare is facing some headwinds in the near term, as evidenced by the bearish technical indicators and the recent decline in share price. As of December 11, 2023, Netcare is trading at R13.27 per share, down 0.82% for the day. This dip follows a strong run-up in the stock price, which has seen it gain 6.97% in the previous month but however, is still 9.34% lower for the year.
Netcare’s current price at R13.27 exhibits a downward trend within a descending channel pattern. Trading above the 50-SMA (blue line) and around the 100-SMA (orange line), the stock remains below the 200-SMA (red line). The RSI’s sharp decline to 45.46 signals bearish momentum.
A sustained push below the 50-SMA and within the descending channel trading pattern would leave a potential for continued bearish pressure towards the R13.04 support level. A break below the initial support could trigger a run lower and would likely bring the R12.75 and R12.43 support levels into play.
However, short-term trading opportunities towards the R13.69 resistance level could arise should the price action bounce from the channel’s resistance. A break above the initial resistance could confirm the bullish momentum, likely bringing the R14.01 and R14.44 resistance levels within the bulls’ reach in the short term.
Netcare’s resilience amidst adversities is reflected in its fiscal performance. Despite technical indicators suggesting potential downward movements, market sentiment could shift based on company strategies and macroeconomic changes. Notable levels to watch include support at R13.04 and resistance at R13.69, which could dictate short-term movements.
Sources: TradingView, MoneyWeb, NetCare Limited, PR Newswire, Seeking Alpha, Reuters, MT Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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