Sportingbet PLC : The bearish trend might get the upper hand

08/08/2012 | 03:17am Opinion : Bearish under 34.5 GBp Target price : 30.5 GBp Stop loss: 35 GBp

LONDON STOCK EXCHANGE Casinos / Gaming

After a rebound without fundamental improvements, the British e-gaming operator might have a new bearish trend toward the GBp 26.25 support area.

From a fundamental viewpoint, the group has not sufficient quality to hope for a continuation of its bullish trend. Indeed, Surperformance rating largely punishes Sportingbet because of an excessive valuation with an EV/Sales ratio higher than its peers. The deterioration of the financial situation and the increasing leverage for the two next fiscal year emphasize risks.

Technically, the security had a technical rebound but there is still a bearish trend in the mid-term. The bullish impetus should be stopped in the coming trading sessions. Thanks to it, the security has reached GBp 34.5 resistance. Yet, 100-day moving average is still bearish and the stock could return toward GBp 30.5.

Investors can anticipate a return toward support area in the coming trading sessions. They can take a short position in Sportingbet. The target price is fixed on the mid-term support at GBp 30.50. A stop loss order could be placed above the GBp 34.5 resistance area.

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