close icon

Geberit to Flush 40% of Gains Down the Drain

Geberit Group is one of the largest sanitary technology and bathroom ceramics providers in the world. Headquartered in Switzerland, the company operates through the Bathroom, Piping, Installation and Flushing Systems segments.

Founded in 1874, its stock trades on the SIX Swiss Exchange under the symbol GEBN. Less than two years after its early-2000 IPO, the stock price fell to CHF 29 in September 2001. In the twenty years that followed, however, Geberit’s market value rose by almost 1900%. The stock closed at CHF 540 two days ago.

And while Geberit’s financials and business performance are nothing short of stellar, we think this is not a good time to join the bulls. The company’s price to earnings ratio stands at 32, which is quite expensive. This is not the only reason to abstain from buying, though. One can even argue that in a zero-rate world quality companies deserve to trade at a premium. Instead, what really bothers us is the chart below and the Elliott Wave pattern it reveals.

Geberit stock to enter Elliott Wave correction

GEBN’s weekly chart shows that the uptrend from its 2001 bottom is a textbook five-wave impulse. The pattern is labeled (1)-(2)-(3)-(4)-(5) and has been developing within the parallel lines of a trend channel. The impulsive structure of wave (3) is also visible and marked 1-2-3-4-5.

Geberit Can Lose as Much as 40% in Elliott Wave Correction

The market has apparently taken the guideline of alternation into account, as well. Wave (2) was a sharp and steady decline to the 61.8% Fibonacci support during the Financial crisis. Wave (4), on the other hand, was a sideways-moving running flat correction which culminated in the COVID-19 crash earlier this year.

If the analysis so far is correct, the recovery Geberit shareholders have been enjoying over the past nine months must be wave (5). It helped the stock reach a new all-time high of CHF 576 in November. The problem is that according to the Elliott Wave theory, a three-wave correction follows every impulse.

So it turns out Geberit is not only fundamentally overvalued, but vulnerable from a technical standpoint, as well. Corrections usually erase the entire fifth wave. In GEBN’s case, a ~40% drop to roughly CHF 330 can be expected over the next couple of years.

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Three Months Ahead of NovoCure ‘s 35% Plunge

Our first and only article on NovoCure stock was published almost three months ago, on July 1st. In it we shared our view that the tumor treatment company was not only significantly overvalued, but in immediate danger of a large stock price drop. The stock had just fell 15% in one day, despite positive TTFields…

Read More »

MongoDB – Bearish Pattern Joins Nosebleed Valuation

MongoDB Inc. is a general purpose database platform developer and provider. The company was founded in 2007, but only came public ten years later – in 2017. During the following four years, the stock has risen from an IPO price of $33 to $515 a share as of last week. So, it is fair to…

Read More »

Pandora Does Things Right. Stock May Need a Breather

When we wrote our previous article on Danish jewelry maker Pandora in December, 2020, the stock was up over three-fold since March. That recovery from DKK 180 to DKK 651 didn’t not come out of the blue, though. It was the result of a bullish setup we managed to identify as early as July 2019.…

Read More »

Match ‘s SP500 Inclusion a Good Excuse to Reach $200

Match Group Inc. rose over 10% in post-market trading Friday following reports that it is going to be included in the S&P 500. The company, which owns Tinder, OkCupid and most other major dating apps in the U.S., has a market cap of over $41B. Despite the anticipated “summer of love”, though, this is not…

Read More »

Cameco Stock Seems to Have Finally Turned a Corner

Uranium spot prices are on the verge of breaking above $34/lb, up over 80% from the bottom of $18/lb reached in late-2016. Cameco, as one of the world’s top uranium producers, is now seeing its stock price rising in tandem. Yesterday, it closed at $19.16 after reaching $21.95 in June. We first covered Cameco in…

Read More »

A Fresh Look At Cigna ‘s Elliott Wave Super Cycle

In a case study article on Cigna, published in October, 2016, we examined how a fundamentally sound and undervalued stock can still drop nearly 90%. The reason for that crash didn’t lie in some company specific issue. Rather it happened to occur during the biggest financial crisis in 80 years. Nevertheless, we made the point…

Read More »

CBOE Takeover Rumor Lifts Stock to Elliott Wave Target

We first wrote about CBOE Global Markets less than eight months ago. The S&P 500 had already recouped all its COVID selloff losses and was hovering at new all-time highs. CBOE, in contrast, was still down 30% from its 2018 record, trading below $97 a share. For some reason, the market was ignoring the company’s…

Read More »

More analyses