Spirent Communications' stock surged despite the publication of S1 2013 earnings, on 1 August, below estimates. EPS is down 71% to 0.020 pound (consensus 0.025) and sales decreased by 27% to 190 million pounds (consensus 196 million). Prices have skyrocketed thanks to an upward revision (Buy vs Hold) at N+1 Singer.

However, fundamentals remains worrying. Indeed, sales and profitability are unsteady (sales are expected down -15% and net profit -50% in 2013). Further, the stock is overvalued with a P/E ratio of 26.98x estimated for 2013 compared to 13.8x for the sector. Finally, EPS estimates are regularly revised downward since the beginning of the year.

The 18% rise, the stock has known since 1 July, should be stopped by the GBp 156 resistance. Indeed, the fundamental configuration does not justify such valuation for the stock. Overbought situation of technical indicators reinforce the downward potential.

A short position can be opened at the current price, in order to comeback to GBp 141.4 pivot point area. A stop loss must be fixed above the GBp 156 resistance.