Greggs plc : The GBp 450 support area is tested

01/11/2013 | 04:34am Opinion : Bullish above 449 GBp Target price : 466 GBp Stop loss: 440.5 GBp

LONDON STOCK EXCHANGE Restaurants

In the past few sessions, Greggs plc shares have suffered from a sharp fall and are now coming back on significant level support.

From a fundamental viewpoint, the company seems undervalued relatively to its peers with a EV/Sales of 0.6.
However, analysts have revised slightly downward their earnings forecasts. With an EPS estimated at GBp 40.1 for this year and GBp 42.78 for the next year, Greggs is currently paid 11.29 and 10.58 times the results.

The security follows a downward trend in the short term, under the GBp 466 resistance area. However, the selling pressure could run out of steam soon. Indeed, whereas the stock shows an oversold condition, the GBp 449 support area currently tested might stop the bearish trend in the short term.

The trading strategy can benefit from the proximity of the strong support currently tested in order to buy Greggs in a good timing. Investors might placed a stop loss order at GBp 435.5 in order to avoid important losses.

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