Inditex falls to annual lows despite earnings outlookIndustria de Diseno Textil, S.A.BME_DLY:ITXActivTradesBy Ion Jauregui – Analyst at ActivTrades Shares of Inditex are undergoing a correction phase in 2026 after declining more than 13% since the start of the escalation of the war between Iran and Israel. The stock has reached annual lows around €49 per share, in a context marked by geopolitical uncertainty and fears of a slowdown in global consumption. Pressure is especially visible in the retail sector, which is highly sensitive to the economic cycle and rising energy costs. Middle East pressures the share price but does not alter the fundamental outlook The recent weakness is mainly driven by rising geopolitical risk and its potential impact on consumption, as well as the indirect effect of higher oil prices on global demand. Although the Middle East represents approximately 8% of Inditex’s store network under a franchise model, its contribution to consolidated sales is below 5%, which limits the direct impact of the conflict on group results. Beyond short-term noise, the company’s structural advantages remain intact. Its business model, based on fast inventory turnover, global distribution and logistical flexibility, allows it to reallocate products across regions within the same season, reducing the risk of overstock and dependence on specific markets. In this context, the conflict has not led to any significant downward revisions in forecasts. Market consensus still expects net profit of around €6.8 billion in 2026, above the record highs reached in 2025, with projections exceeding €8.7 billion in 2027. The market continues to trust European retail The European discretionary consumer sector maintains expectations of a gradual recovery in the coming years, supported by the normalization of earnings-per-share growth after several years of adjustment. Within this environment, Inditex continues to stand out as one of the highest-quality defensive names in the sector, thanks to its geographic diversification, cash generation and operational efficiency. The upcoming results release in early June will be key to determining whether the recent correction is driven solely by exogenous factors—such as geopolitics—or whether it begins to reflect a more structural slowdown in global consumption. Technical analysis of Inditex From a technical perspective, the stock has tested a key support zone around €49, a level that coincides with annual lows and an important reference within the previous consolidation range. If this support holds, the most likely scenario points to a technical rebound towards the €52–53 range (point of control of the range), with further extension towards resistance at €54–55 in a second phase. A sustained close above this level would open the door to a recovery towards all-time highs at €57.48. Conversely, a clear break below current support would increase downside pressure towards levels close to €45.4. Short-term moving averages (50- and 100-day) remain in a bearish configuration, while the 200-day moving average has recently been tested without confirmation of a sustained breakout. Momentum indicators show oversold conditions, with the RSI around 37%, suggesting a possible exhaustion phase of the downward move. The MACD continues to reflect selling pressure, although with a declining slope. Overall, the market is in an unstable equilibrium phase, with moving average compression and a narrowing range, which could precede a directional move in the coming weeks. Despite the short-term technical deterioration, analyst consensus maintains a constructive outlook. The average price target stands at around €58.7, implying upside potential of approximately 17.5% from current levels, with mostly positive recommendations, suggesting the stock is clearly oversold and undervalued at current prices. The divergence between geopolitical risk and underlying fundamentals continues to drive price action, which is why part of the market views the current correction as an accumulation phase rather than a structural trend reversal. ******************************************************************************************* The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication. All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance and forecasting are not a synonym of a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Political risk is unpredictable. Central bank actions can vary. Platform tools do not guarantee success.