Does this Upgrade present an opportunity for you?

Is it irrelevant, or will the Upgrade make the Pearson share price more attractive?

• The chart shows the Pearson share price since March.
• Share Capital upgrades Pearson to Buy.
• Consensus summary: 2 Buys, 7 Holds, 11 Sell; Average target: 775p (Source: Bloomberg).
• Current share price 860p (at time of writing).
• Brokers at CFRA says that Pearson’s outlook is starting to be more positive after the company improved its adjusted EPS guidance in its latest trading update (17 Oct).
• Will the shares turn back, or will the upgrade push the shares back towards summer highs of 973p?
• Shares -14.16% from 2018 highs; +28.33% from 2018 lows; +17% year-to date

Click to enlarge

Trading Pearson – An Example

Let’s say you think that Pearson shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Pearson using a CFD, at the current price of 860p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Pearson share price rises to 973p (+13%). Your profit would be £1,300 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 9% from the current price. Pearson shares continue their downtrend, they fall 9% and hit your stop-loss. Your loss would be £900.

This is provided for information purposes only. It should not be taken as a recommendation.