BAT shares surge but flash overbought warning—should investors hold or fold?
British American Tobacco (BAT) shares have seen significant activity recently, with institutions holding a substantial 16.16% of the company's shares. However, the stock's Relative Strength Index (RSI) is at 73, indicating it may be overbought in the stock market.
BAT's fundamentals remain strong, with a return on capital employed (ROCE) of 11–14% and a debt-to-equity ratio of 0.68. The company is also ramping up share buybacks, removing 110,000 shares from circulation. Interestingly, institutional investors are making bold moves, with Zions Bancorporation increasing its stake by a staggering 46,000%.
However, the stock experienced a sharp intraday drop of nearly 2%, trading at 4,067p. CEO Tadeu Marroco is doubling down on BAT shares through a deferred bonus scheme, indicating confidence in the company's future. Despite this, the RSI is flashing an overbought signal in the stock market, suggesting potential exhaustion. Analysts maintain a cautious 'hold' consensus for BAT, with an average target range of 4,040p to 4,120p.
Given the mixed signals from the stock's performance and analyst recommendations, an urgent analysis is recommended for BAT shareholders to decide whether to buy or sell in the stock market.
