JP Morgan fuels rumours of a Cellnex purchase and raises the target price.

January 19, 2021 14:00

For some time now, the markets have wondered about the possibility that American Tower may purchase Cellnex, which specialises in the management of telecommunications towers. Now, some JP Morgan experts have hinted that there is an increased possibility that it may come to fruition.

We have to wait and see if this happens, but if it does, Cellnex could experience a new bullish rally. Some analysts have raised its valuation up to 73.50 euros, which would mean an upward potential of more than 50%. 

During the last two years, Cellnex has undoubtedly been one of the main players in the IBEX35, as it has experienced a strong upward trend where it rose 189.25% from the beginning of 2019 to mid-2020, reaching 60 euros per share, although it is currently trading around 46 euros, in the lower zone of the bearish channel that began after setting all-time highs at the 38.2% fibonacci level.

We can see that the stochastic indicator is at oversold levels on the weekly chart, while its MACD indicator has crossed down the 0 line, which could cause the price to continue correcting. A confirmation would be the bearish crossover from its 18 week moving average (black) to its 40 moving average (orange).

This correction may be due to a natural correction due to the strong rises in recent months, so it could be interesting to value long positions if it finally rebounds to the upside.

Source: Admiral Markets MetaTrader 5. Cellnex weekly chart. Data range: from May 3, 2015 to January 19, 2021. Prepared on January 19, 2021 at 11:20 am CET. Keep in mind that past returns do not guarantee future returns.

Price evolution of the last 5 years:

2020: 37.31%

2019: 94.43%

2018: 4.87%

2017: 56.24%

2016: -20.74%

For its part, the technical situation of American Tower is quite similar to that of Cellnex, since in recent years it has experienced a strong rise which resulted in more than 100 dollars per share, although in its case the bearish crossover has already occurred in the moving averages, so the price could continue with its correction so we must be vigilant and see if it reaches the 38.2% fibonacci level since the strong uptrend began in 2016.

Source: Admiral Markets MetaTrader 5. American Tower weekly chart. Data range: from May 3, 2015 to January 19, 2021. Prepared on January 19, 2021 at 11:20 am CET. Keep in mind that past returns do not guarantee future returns.

Price evolution of the last 5 years:

2020: -2.33%

2019: 45.28%

2018: 10.88%

2017: 35.00%

2016: 9.00%

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