Associated British Foods plc: A technical correction is coming
Published on 11/25/2014
at 09:40 am GMT
Share
SELL
Conditionne
Live
Entry price
Target
Stop-loss
Potential
GBX 3,091
GBX 0
GBX 3,194
+100%
Associated British Foods should undergo some profit-taking after the rebound in recent sessions.
From a fundamental viewpoint, Goldman Sachs keeps a 'sell' position with a target price at GBp 2570.
Technically, the proximity of the GBp 3125 medium-term resistance limits the upside potential on the stock. The uptrend in the short term could be stopped by this level and prices could decrease sharply in the coming sessions. Technical indicators also show an overbought situation that reinforces this bearish scenario. Thus, there is a higher downside potential than upside.
Therefore, the most offensive investors can benefit from the technical configuration to take a short position next to the GBp 3125 resistance. The main objective will be fixed near to the GBp 2760 support. Only the breakdown of this level would open up new bearish targets toward GBp 2600 and 2466. The stop loss will be set above GBp 3125.
The content herein constitutes a general investment recommendation, prepared in accordance with provisions aimed at preventing market abuse by Surperformance, the publisher of MarketScreener UK. More specifically, this recommendation is based on factual elements and expresses a sincere, complete, and balanced opinion. It relies on internal or external data, considered reliable as of the date of their release. Nevertheless, this information, and the resulting recommendation, may contain inaccuracies, errors, or omissions, for which Surperformance cannot be held responsible. This recommendation, which in no way constitutes investment advice, may not be suitable for all investor profiles. The reader acknowledges and accepts that any investment in a financial instrument involves risks, for which they assume full responsibility, without recourse against Surperformance. Surperformance commits to disclosing any conflict of interest that may affect the objectivity of its recommendations.
Associated British Foods plc is one of the largest European food processing groups. Net sales (not including sold divisions) break down by family of products as follows:
- grocery and bakery products (21.3%): tea (Twinings brand), oils (Mazola and Capullo), spices (Spice Islands and Durkee), jam, bread, biscuits, sauces, etc.;
- sugar (10.6%): Silver Spoon, Billington's brands, etc.;
- ingredients (10.6%): yeasts, flavorings, emulsifiers, sterols, esters, etc.;
- processed food products (8.4%): mainly cereal and animal feed.
The remaining sales (49.1%) are from clothing distribution (473 outlets located mainly in the United Kingdom, Ireland, Spain, Germany, the Netherlands, and Portugal under the Primark and Penneys names).
Net sales (not including sold divisions) are distributed geographically as follows: the United Kingdom (35.8%), Europe and Africa (39.6%), Americas (12.7%) and Asia/Pacific (11.9%).
This super rating is the result of a weighted average of the rankings based on the following ratings: Valuation (Composite), EPS Revisions (4 months), and Visibility (Composite). We recommend that you carefully review the associated descriptions.
Investor
Investor
This super composite rating is the result of a weighted average of the rankings based on the following ratings: Fundamentals (Composite), Valuation (Composite), EPS Revisions (1 year), and Visibility (Composite). We recommend that you carefully review the associated descriptions.
Global
Global
This composite rating is the result of an average of the rankings based on the following ratings: Fundamentals (Composite), Valuation (Composite), Financial Estimates Revisions (Composite), Consensus (Composite) and Visibility (Composite). The company must be covered by at least 4 of these 5 ratings for the calculation to be carried out. We recommend that you carefully review the associated descriptions.
Quality
Quality
This composite rating is the result of an average of rankings based on the following ratings: Returns (Composite), Profitability (Composite) and Quality of Financial Reporting (Composite), and Financial Health (Composite). The company must be covered by at least 2 of these 3 ratings for the calculation to be performed. We recommend that you carefully read the associated descriptions.
ESG MSCI
ESG MSCI
The MSCI ESG score assesses a company’s environmental, social, and governance practices relative to its industry peers. Companies are rated from CCC (laggard) to AAA (leader). This rating helps investors incorporate sustainability risks and opportunities into their investment decisions.
