Pernod Ricard : Below a major resistance level

11/09/2020 | 05:30am EST

short sell Stop-loss triggered

Entry price : 149€ | Target : 138.4€ | Stop-loss : 157€ | Potential : 7.11%

Up substantially over the past few weeks, shares in Pernod Ricard should pause in their rise close to the major resistance around 150.05 EUR. Investors should open a short trade and target the € 138.4.

Strengths

• The company returns high margins, thereby supporting business profitability.
• Considering the small differences between the analysts' various estimates, the group's business visibility is good.

Weaknesses

• The stock is currently in contact with a medium-term resistance that must be gotten rid of so as to resume the upward trend.
• The company is in a hindered financial situation with significant debt and rather low EBITDA levels.
• The company's earnings releases usually do not meet expectations.
• With an enterprise value anticipated at 5.53 times the sales for the current fiscal year, the company turns out to be overvalued.
• The sales outlook for the group was lowered in the last twelve months. This change in forecast points out a decline in activity as well as pessimistic analyses of the company.
• For the last twelve months, sales expectations have been significantly downgraded, which means that less important sales volumes are expected for the current fiscal year over the previous period.
• For the last few months, analysts have been revising downwards their earnings forecast.

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