The Darktrace share price is off session lows and has reversed earlier losses on the day to push upward by 1.7%. Investors remain hopeful that the latest takeover deal will sail through.
InvestingCube's S&R Levels
In Sell Zone
The cybersecurity firm confirmed that it had been approached by US firm Thoma Bravo for a possible cash-based takeover earlier in the week. The announcement triggered a spike in the Darktrace share price, which surged 24.2% on Tuesday. It has since added more than 6% and now trades at 552.2p.
However, there are threats to these sharp gains in the Darktrace share price by a section of the company’s shareholders, who oppose the deal on what they perceive is an undervaluation of the UK cybersecurity firm. Some UK lawmakers are also opposing the deal. Cisco, CrowdStrike, and Palo Alto Networks are companies that are said to be lining up with counteroffers if the Thoma Bravo deal fails to go through.
There is also the matter of CEO Mike Lynch. He is fighting a criminal indictment in the US after being accused of overseeing an accounting fraud that was used to overvalue Autonomy, a company he co-founded prior to its acquisition by Hewlett-Packard for 9 billion pounds.
The Darktrace share price is up nearly 49% for the month and more than 70% since 1 July as the takeover news came on the back of the release of an optimistic earnings forecast late last month.
Darktrace Share Price Forecast
The 549.6 resistance (7 July 2021/18 November 2021/17 August 2022 highs) remains the price barrier to beat for the bulls. Clearance of this resistance gives the bulls clear skies to aim for 641.2, the 10 August 2021 high site. Above this level, the 6 August 2021/2 November 2021 highs at 702.2 becomes the next price target. After that, further upside targets are found at 792.0 (28 September 2021 and 12 October 2021 lows) and 901.6 (11 October 2021 high).
Conversely, rejection at 549.6 renders the upside outlook invalid, even temporarily. This situation favours a pullback to the 485.8 support, formed by the 25 March 2022 high and 16 August 2022 low. 438.8 (28 March 2022 low) and 380.2 (9 June high and 11 August low) are additional downside targets, followed by 360.6 if the price deterioration continues.