Diageo plc : Downward momentum
By Etienne Veber
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
GBX 1,850.34 | GBX 0 | GBX 1,904 | +100% |
The company is fragile. Financially, the group is in a difficult situation with a high leverage estimated at 2.16 for the current year. Forecasts downgraded by analysts regarding earnings per share reflect the lack of visibility in the short term.
Technically, the share is in a downward trend. The moving averages are decreasing and are still above prices, thereby stopping any rebounds. The security is now near the GBp 1880, a level that will represent a good entry point for a short-selling.
Investors could take a short position in Diageo to target GBp 1768. They will also place a stop loss above the GBp 1880 resistance area, level that would invalidate our bearish strategy.