Utility Stock Flashing Bear Signal

AES fell yesterday despite strong fourth-quarter results

Deputy Editor
Feb 28, 2023 at 3:28 PM
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Global power stock AES Corp (NYSE:AES) is on the rise today, up 1.6% to trade at $25.27 at last glance, and on track for its first positive day since Feb. 15. The company reported better-than-expected fourth-quarter results before the open yesterday, but the shares couldn't keep the momentum, falling 1.7% by end of day. The equity also received two price-target cuts, including one today from UBS to $30 from $32.

Today's bounce could be short-lived, however, as AES just came within one standard deviation of its 40-day moving average. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, AES stock has seen five similar signals over the past three years, after which the stock was lower each time, averaging a 5.4% loss. From its current perch, a similar move would put AES just below the $24 level, its lowest level since October.

AES Feb28

A round of downgrades could send the security lower still, as all seven of the analysts in coverage carry a "strong buy" rating. Plus, the 12-month consensus price target of $31 is already a 22.7% premium to current levels, leaving room for bear notes in the form of price-target cuts. 

Options look like a good way to go when weighing in on AES. The stock is seeing attractively priced premiums, per its Schaeffer's Volatility Scorecard Index (SVI) of 28%, which ranks in the low 13th percentile of its annual range.

 

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