Will BRF SA (ADR) Short Squeeze Soon? The Stock Formed a Wedge Down

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The stock of BRF SA (ADR) (BRFS) formed a down wedge with $13.70 target or 7.00% below today’s $14.73 share price. The 5 months wedge indicates high risk for the $13.37 billion company. If the $13.70 price target is reached, the company will be worth $935.90 million less.
Falling wedges are poor performers for bullish breakouts and are tricky moments to trade. Investors must be aware that the break even failure rate for up or down breakouts is: 11% and 15%. The average rise is 32% and the decline is 15%. The falling wedges has high throwback and pullback rate: 56%, 69% and the percent of wedges meeting target is not very high. The stock is down 1.07% or $0.16 after the news, hitting $14.73 per share. About 793,688 shares traded hands. BRF SA (ADR) (NYSE:BRFS) has declined 31.29% since May 8, 2015 and is downtrending. It has underperformed by 28.27% the S&P500.

Out of 6 analysts covering BRF S.A. (NYSE:BRFS), 3 rate it “Buy”, 2 “Sell”, while 1 “Hold”. This means 50% are positive. BRF S.A. was the topic in 5 analyst reports since September 16, 2015 according to StockzIntelligence Inc. Bank of America downgraded the stock on October 30 to “Neutral” rating. Goldman Sachs downgraded the shares of BRFS in a report on October 5 to “Sell” rating.

According to Zacks Investment Research, “BRF Brasil Foods SA, formerly Perdigao S.A., is a Brazil-based food company focused on the production and sale of poultry, pork, beef cuts, milk, dairy products, and processed food products. The Company’s products include frozen whole and cut chickens; frozen pork cuts and beef cuts; processed food products, such as marinated frozen whole and cut chickens, roosters (sold under the Chester brand) and turkeys; specialty meats, such as sausages, ham products, bologna, frankfurters, salamis, bacon and other smoked products; frozen processed meats, such as hamburgers, steaks, breaded meat products, kibes and meatballs, and frozen processed vegetarian foods; frozen prepared entrees, such as lasagnas and pizzas, as well as other frozen foods, including vegetables, cheese bread and pies; dairy products, such as cheeses, powdered milk and yogurts; juices, soy milk and soy juices; margarine; milk, and soy meal and refined soy flour, as well as animal feed.” Get a free copy of the Zacks research report on BRF SA (ADR) (BRFS).

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