PureCircle Limited : The bearish trend might get the upper hand
By Etienne Veber
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
GBX 422.5 | GBX 0 | GBX 441 | +100% |
Compared to its fundamentals and its peers, the company seems overvalued. It has a 6.96x EV/Sales ratio and the security is currently trading 54 times its anticipated EPS.
From a technical viewpoint, the security is in a bearish trend in the long and mid-term, even if prices have increased in the short term. The current technical rebound allows the stock to be close to its GBp 427.5 resistance. Despite the breakout of 20-day moving average, prices should decrease soon because of the bearish trend in the long term.
Therefore, fragile fundamentals and technical pattern let see a downside potential. Investors can open a short trade close to the GBp 427.5 resistance area and aim a return in the GBp 367.5 support area. A stop loss will be fixed above GBp 427.5 (at GBp 441) because a breakout of this threshold would invalidate this trading strategy.