Tullow Oil plc : The downward trend still dominates
By Arnaud Le Berre
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
GBX 1,102 | GBX 0 | GBX 1,127.5 | +100% |
The rebound recorded in the last trading sessions is not justified by Tullow Oil’s fundamentals which are still fragile. Indeed, the company is highly valued: analysts estimate it has a 24.8x P/E ratio and a 6x EV/Sales ratio for this year. Finally, the Thomson Reuters consensus has recently revised downward EPS estimates. It is often an indicator of the coming decline in profitability.
From a technical viewpoint, the security is in a bearish trend in the long and mid-term, even if prices have increased in the short term. The current technical rebound allows the stock to be close to its GBp 1112 resistance. Despite the breakout of 20-day moving average, prices should decrease soon because of the bearish trend in the long term and the bad-orientation of the 50-day moving average.
Investors can anticipate a return toward support area in the coming trading sessions. They can take a short position in Tullow Oil. The target price is fixed on the mid-term support at GBp 1048. A stop loss order could be placed above the GBp 1112 resistance area.