British American Tobacco could start a technical downward trend after the rebound in recent sessions.

The group fundamentals are fragile and those weaknesses are highlighted by its Surperformance ratings. The business activity offers no growth potential as sales are not improving. Worse than that, revenues are in a downtrend since 2012. Moreover, EPS and revenues have been largely revised downwards by Thomson-Reuters analysts showing the poor dynamic of the group activity. Furthermore, the financial situation is worsening as debt and leverage are increasing. In addition, the company seems overvalued, considering its EV/Revenues ratio of 5.09x on 2014 estimates.

After a strong acceleration movement, the technical configuration and fundamentals call for a consolidation phase. The GBp 3450 resistance should stop the upward trend and the stock price should start a reversal movement towards GBp 3307.
Therefore, to take advantage of this technical correction, a short position may be opened in the current area to target GBp 3307 and then GBp 3200. In case of further acceleration, the stop loss will be triggered above the GBp 3450.