The last time we wrote about Danish jewelry maker Pandora was in mid-February, 2022. The company had just reported its highest annual sales ever. Yet, the stock was down 30% since its November 2021 peak in a corrective pullback Elliott Wave analysis had helped us predict back in September. The bad news was that the correction didn’t seem to be complete. So we thought the next wave of selling can “drag the stock below DKK 600.” Since there was absolutely nothing wrong with the underlying business, our pessimism was only rooted in the chart below.
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That was four months ago. The drop from DKK 950 to DKK 667 simply looked too shallow in relation to the preceding five-wave impulse. So it made sense for the bears to drag the price lower before giving up. And drag it they did. Not only did Pandora stock fall bellow DKK 600, but it pierced DKK 500, as well.
Pandora Bears Seem to be Getting Tired
On the other hand, the theory states that the prior uptrend is supposed to resume once wave (2) is over. Things brings us to the logical question of what is left of it? Not much, according to the updated chart below. The wave structure inspires a better idea now, so we’ve come up with a slightly different labeling. Take a look.
The decline from DKK 950 can best be seen as a W-X-Y double zigzag, where both waves W and Y are simple a-b-c zigzags. Wave ‘c’ of Y looks like an ending diagonal pattern, whose wave ‘v’ should soon complete the entire correction. If this count is correct, we can expect one last dip towards DKK 470, followed by a bullish reversal for the start of wave (3) up. The fact that the price has entered the 61.8% Fibonacci support area only increases the odds in the bulls’ favor. Long-term targets above DKK 1000 per share seem reasonable.
Furthermore, one doesn’t have to rely solely on the charts when it comes to Pandora stock. Pandora the company has never been in a better shape and management guidance calls for DKK 60 in 2023 EPS. This means that at DKK 500 the stock trades at a P/E ratio below 8.5. So, in addition to the bullish Elliott Wave setup, it turns out we can rely on a strong and undervalued business, as well.
Disclosure: Pandora A/S is part of the EWM Interactive Stock Portfolio. There are 17 other positions in it that have yet to realize their full potential, as well. Download the portfolio and read about them now!