William Hill could start a technical downward trend after the rebound in recent sessions.

From a fundamental viewpoint, William Hill seems fragile. In fact, the company’s financial situation is complicated. Debt has increased last year and as EBITDA is not following at the same speed, leverage has risen to 1.82. Moreover, analysts from Thomson Reuters have largely revised downward their EPS estimations or the two coming years, proving the company’s profitability is decreasing. Finally, the company seems overvalued compared to others in its sector, with an EV/Revenue ratio of 2.36x 2014 estimates.

Graphically, the stock went through a period of rebound in recent sessions towards the GBp 362 medium-term resistance. The share should consolidate near this area. It could act as a stopping point of the upward movement. This scenario suggests a return to the GBp 335.9 support area which will be a bearish objective.

The technical configuration and fundamentals lead us to predict a consolidation phase, at least in the short term. The GBp 362 should play its full role and to stop the upward trend initiated in the short term. Therefore, to take advantage of this technical correction, a short position may be opened in the current price area to target GBp 335.9. In case of further acceleration, the stop loss will be triggered above the GBp 362.