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Tesco share price analysis ahead of interim earnings


Tesco (LON: TSCO) share price has staged an unease recovery in the past three straight days as investors wait for the upcoming earnings. The stock rose to a high of 210p, which was much higher than last week’s low of 199p. 

Tesco earnings ahead

Tesco shares have come under intense pressure in the past few weeks amid concerns about the giant British retailer. The stock has already collapsed by more than 30% from its highest level this year. Other leading retailers in the UK like Ocado, Marks and Spencer, and Boohoo have all crashed by more than 20% this year.

There are several reasons why Tesco shares have plummeted. First, the British pound has fallen by more than 20% this year. Tesco is exposed to this weakness because of the vast amount of goods that the company buys from the overseas market. As such, it has made them more expensive.

Second, Tesco share price has also crashed because of the rising inflation that is slowing demand. Historically, retailers tend to see less shopping when inflation is rising at a faster pace than wages. As I wrote in a previous article, Ocado saw smaller average basket sizes in its last quarter.

Third, Tesco is seeing substantial competition from Aldi, the German discount company. The firm has taken market share and is now the third-biggest retailer in the UK.

Focus now shifts to the upcoming Tesco earnings that are scheduled for Wednesday of this week. The consensus among analysts is that the company’s revenue rose to £63.63 billion. They also expect that its revenue will keep rising to £64.9 billion in the next financial year followed by £66.15 billion in FY24/25. 

In terms of profitability, analysts expect that the company’s adjusted operating profit rose to £2.63 billion. 

Tesco share price forecast

The daily chart shows that the TSCO stock price has been in a strong downward trend in the past few months. This decline accelerated after the stock crashed below the important support level at 242.5p. It has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has been in a strong bearish trend.

Therefore, the stock will likely continue falling as sellers attempt to move below last week’s low of 200p. A move above the resistance at 220p will invalidate this view.

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