UK retailers are having a great year as the British retail sector remains quite resilient. Tesco (LON: TSCO) share price is nearing 300p while Sainsbury’s (LON: SBRY) stock has jumped to the highest point in over 22 years. Marks and Spencer (MKS) shares rose to over 260p, 175% above the lowest level in 2022.
Sainsbury’s is doing wellSainsbury’s stock price has charged this year, helped by the company’s strong results and market share gains. The most recent figures showed that the company’s grocery sales jumped by 11% in the first half of the fiscal year.
General merchandise revenue rose gradually by 1.1% while clothing sales fell by 8.4%. In all, the company’s statutory sales rose by 3.5% even as fuel sales fell by 19.6%. It expects that its profit before tax for the year will be between 670 million and 700 million pounds while its free cash flow will be about 600 million pounds.
These are strong results for a company that was struggling a few years ago. Also, the management has lowered its net debt to 5.64 billion pounds. The company will pay its next dividend of 3.9 pence per share on December 15th.
It is against this backdrop that analysts at Goldman Sachs decided to upgrade the stock. In a note, Richard Edwards moved his target from 300p to 350p. If this happens, it means that the Sainsbury’s share price will rise by over 16.5% from the current level. His statement added:
“Consequently, Sainsbury’s has seen strongly improving market share momentum, with recent market share gains outpacing Aldi.”
There are other catalysts for SBRY and other British retailers. Inflation expectations have dropped to their lowest level in two years while analysts expect the Bank of England (BoE) will start to slash interest rates in 2024.
Sainsbury’s share price forecast
The daily chart shows that the SBRY stock price has been in a strong uptrend in the past few months. Most importantly, the shares have flipped the important resistance level at 286.3p into a support point. This was an important level since it was the highest point on July 23rd.
By moving above that price, the stock invalidated the double-top pattern that has been forming whose neckline is at 240p. This is a sign that bulls have a bullish momentum. The Relative Strength Index (RSI) has moved to the extremely overbought point of 82.
Therefore, the outlook for the stock is bullish, with the next point to watch being at 310p. Still, with the stock being overbought, a break and retest pattern that pushes it at 286p could happen. In most periods, this pattern is one of the most bullish signs in the market
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