Meggitt share price is up by about 0.40% today after the company delivered its trading update. MGGT stock is trading at 427p, which is lower than this year’s high of 480p.
Background: Meggitt is a UK engineering company that provides products to the aviation industry. It provides hundreds of products to companies like Airbus, Boeing, and Safran. These products include aircraft cameras, ice protection, fuel systems, flight displays, and conditioning products among others.
The company generates more than £2.2 billion of revenue every year, with most of them coming from its airframe systems business. 18% of revenue comes from the energy and equipment business while 21% of it is in services and support and 14% from the engine systems. Therefore, the company had a difficult 2020 because the coronavirus pandemic affected the aviation and energy industry.
What’s happening: Meggitt share price is moving today because of the company’s trade update. It expects to deliver its 2020 forward guidance even as the world continues to battle the illness. It expects its profit to be between £180 million and £200 million while revenue will fall to £1.7 billion. It will also have a positive cash flow while its debt will decline.
On the daily chart, we see that Meggitt share price has been under pressure this year because of the new lockdowns. The stock has dropped from a high of 482p to the current 427p. It has also moved below the 25-day and 15-day simple moving average and the 50% Fibonacci retracement level. Also, it has moved below the ascending channel.
Therefore, in my view, I suspect that the stock will continue falling as bears target the 38.2% retracement at 391p. The alternative scenario is where it bounces back as bulls target the upper side of the channel at 500p.
