Fiverr International Ltd. (RVRF) fell 4% during Tuesday’s session after MKM Partners downgraded the stock from Neutral to Sell, but raised its target price from $145.00 to $185.00 per share, a discount of 21.5% from Monday’s closing price.
Key points to remember
- Fiverr shares fell after MKM Partners downgraded the stock to Sell, although the company raised its price target to $185 per share.
- Analyst Rohit Kulkarni believes that Fiverr’s fundamentals have improved throughout the pandemic, but that the stock Evaluation became “feverish”.
- Technical indicators suggest the stock could see further decline if it breaks down from the lower trendline Support.
MKM Partners analyst Rohit Kulkarni noted that Fiverr stock is trading at 36 times expected earnings for FY21, which is above the all-time high of any other internet market in recent times and surpassing that of Zoom Video Communications, Inc. (ZM) and other pandemic plays. While the fundamentals are “significantly stronger”, the analyst believes that valuation levels have become “feverish”.
The move comes shortly after UBS downgraded Fiverr stock to Sell on Jan. 19, saying the risk/reward is biased downwards when measuring valuation versus implied growth. While the analyst sees secular growth themes, there could be some tough comps in 2021 alongside a higher valuation relative to its peers.
From a technical standpoint, the stock moved towards trendline support at around $222.00 during Tuesday’s session. The relative strength index (RSI) continues to trade at neutral levels of 49.59, but the moving average convergence divergence (MACD) experienced a bearish crossover, suggesting that there is room for more downside to come.
Traders should watch for a bounce from the trendline support at around $222.00 towards the upper trendline resistance at around $250.00. If the stock breaks out of these levels, traders could see movement towards earlier highs around $185.00. If the stock breaks down from the trendline support, traders could see a move towards the $188.71 Fibonacci support levels.
Fibonacci retracement levels are horizontal lines that indicate where support and resistance are likely to occur. They are based on Fibonacci numbers. Each level is associated with a percentage. The percentage is the amount of a previous move that the price has retraced. The Fibonacci retracement levels are 23.6%, 38.2%, 61.8% and 78.6%. Although not officially a Fibonacci ratio, 50% is also used.
Fiverr shares fell after MKM Partners downgraded the stock to Sell, although the company raised its price target to $185 per share. While analyst Rohit Kulkarni believes the company’s fundamentals are improving, valuation levels have turned “feverish”. Technical indicators point to greater downside potential if the stock breaks away from support.
The author does not hold any positions in the stocks mentioned, except through passively managed index funds.
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