Is it irrelevant, or will the Upgrade make the British American Tobacco share price more attractive?

• The chart shows the British American Tobacco share price since January.
• RBC Capital Markets upgrades BATS to Sector Perform, setting the target price at 2700p.
• Consensus summary: 17 Buys, 6 Holds, 2 Sell; Average target: 3941p (Source: Bloomberg).
• Current share price 2800p (at time of writing).
• Will the shares turn back, or will the upgrade push the shares back towards October highs of 3650p?
• Shares -46.4% from 2018 highs; +3.3% from 2018 lows; -44.1% year-to date.
• Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal, CMC Markets

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Trading British American Tobacco – An Example

Let’s say you think that British American Tobacco shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of British American Tobacco using a CFD, at the current price of 2800p. To do this, you need £2,000.

For the purpose of this example, let’s assume the British American Tobacco share price rises to 3650p (+30.35%). Your profit would be £3035 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 8% from the current price. British American Tobacco shares continue their downtrend, they fall 8% and hit your stop-loss. Your loss would be £800.

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