AG Barr shares: Rebound time or fresh losses?
A profits warning has left investors with a bitter taste. Our chartist looks at recovery potentials.
17th July 2019 09:06
A profits warning has left investors with a bitter taste. Our chartist looks at recovery potentials.
AG Barr (LSE:BAG)
We last reviewed AG Barr (LSE:BAG) a month ago, spending the last week feeling smug at the share price's dance on our 860p drop target. It did break our 860p briefly, hitting an alarming 859p in the process. Was this payback for their lack of sugar in Irn Bru?
There are suspicions the "profit warning" was due to Scots panic buying proper Irn Bru, prior to the recipe change to something which, frankly, left a bitter aftertaste.
It makes one wonder, if no-one thought to review the Coca-Cola experience, when Coke changed the recipe?
An insipid 2019 compared with a strong 2018 (doubtless due to fanatical Scots stockpiling) should probably have been expected, if indeed the profit warning can truly be attributed to a drop in sales of their primary product.
The situation against Barr's share price now looks rather risky. Utterly key for the following scenario shall be their share price closing a session below 616p.
In fact, intraday traffic below 600p is liable to be a reasonable early warning signal. Such a disaster allows ongoing weakness to 498p initially. If broken, secondary is a probable bottom of 347p which rather neatly matches the lows of 2012.
Of course, there's doubtless a bean counter at Barr's who's about to suggest "Classic Irn Bru" might sell, perhaps at a premium price. Invariably, this will probably be the same person who suggested changing the recipe to avoid the UK Govt sugar tax...
AG Barr needs to better red on the chart below, presently 775p, to suggest this dip has been a dreadful mistake.
For now, we suspect a trip to 498p is on the cards where it shall hopefully rebound.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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