Fever-Tree: can the share price fizz up to this level?
The share price avoided our analyst's ultimate bottom prediction. Here, he looks for a catalyst.
3rd September 2020 09:28
The share price avoided our analyst's ultimate bottom prediction. This time, he looks for possible catalysts.
Fever-Tree Drinks Plc (LSE:FEVR)
Finally, we got around to actually testing a company’s product, abandoning our usual aloof stance of just looking at numbers. In fairness, it was completely by accident, as the local shop had run out of Schweppes Tonic Water.
As we were mixing dark rum with Fever-Tree's (LSE:FEVR) product, it was inevitable a glance was taken at their share price movements since our update last January.
Importantly, in our previous analysis of Fever-Tree, we had given a drop target of 983p, warning movement below such a level risked taking the share into the grasp of an eventual 159p!
We've noticed with many shares, despite some drop targets breaking due to the Covid-19 drop in mid-March, that price movements in the period since the exaggerated drop have tended to eradicate threats of leaks down to ultimate bottom levels.
This is certainly the case with Fever-Tree, the company share price requiring to close a session below 1,870p before we would dare express any sort of nerves for the future.
Closure below 1,870p would not be great, now calculating with the potential of reversal to an initial 1,460p with secondary, if broken, at a bottom (hopefully) of 1,277p.
Thankfully, absolutely nothing at present suggests such a risk.
Instead, we shall be quite interested should the price manage to trade above 2,135p as a cycle toward an initial 2,800p looks possible.
If exceeded, our secondary calculation at 3,279p makes a lot of sense visually.
As for the company’s tonic water, it proved as acceptable as the traditional Schweppes product!
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.
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