Treasury Wine Estates Share Price Declines (ASX:TWE)

Trading at $11.12 at the time of writing, Treasury Wine Estates Ltd [ASX:TWE] is facing serious headwinds in regaining growth in their share price.

The impact of COVID-19 on the Australian wine maker is being felt in both the domestic and international market.

Treasury Wine Estates Share Price Chart 1

Source: Optuma

Where is Treasury Wine Estates currently?

In a recent article on TWE we discussed what had taken place since the onset of the COVID-19 pandemic.

Since then a few changes have taken place over at Treasury.

A change of CEO, with Tim Ford starting in the position on 1 July, replacing the outgoing Michael Clarke.

Mr Ford has outlined a plan to develop luxury wine in the US and has started exploring selling some of its brands to help prepare the push.

Along with his first trading update saying a restructure of the US business is complete and would save them at least $35 million in the 2021 financial year.

While all of this sounds very nice, there are challenges ahead.

A recent market update announced that F20 EBITS has declined against the prior year by approximately 21% for the Group.

Along with the company’s stock being downgraded by several brokerages — including JPMorgan, Credit Suisse, and UBS.

The global outlook for Treasury Wines is uncertain in the times of COVID-19, so what does this do for their stock price?

Where can Treasury Wine Estates go from here…

Considering the current challenges the company faces and the downgrade by brokers, Treasury’s stock price moved sideways since April 2020.

This sideways movement took place on ever-decreasing volume representing indecision between buyers and sellers, sooner or later one side will take hold and pick a direction for the price.

ASX TWE Share Price Chart 2

Source: Optuma

Looking at the chart, in recent weeks the price has pushed up against the $11.53 resistance level, without being able to break through.

Should the buyers gain the momentum in volume to push up, breaking through this level would be important on the way up to $13.46, which may provide future resistance.

If the sellers can take control of the future move, we may see the price pushed down to the levels of $8.90 and $6.60.

Right now, just keep an eye out and wait to see what is next for TWE…

Regards,

Carl Wittkopp,
For 
Money Morning

PS: Four Well-Positioned Small-Cap Stocks: These innovative Aussie companies are well placed to capitalise on post-lockdown megatrends. Click here to learn more.

 


Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

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