Boohoo share price has been in a tight range in the past few days as concerns about its sales growth continues. The shares are trading at 40.45p, which is a few points above this month’s low of 30p. It has crashed by more than 44% from its highest level in September. The stock is down by more than 91.20% from its all-time high.
Is Boohoo a good buy now?
Boohoo stock price has been in a strong bearish trend in the past few months. This sell-off continued as concerns about the soaring inflation and weak earnings. In September, Boohoo issued a profit warning and warned that the company will see weak growth. The firm’s revenue dropped by 10% to 882 million pounds in the first half of the year.
Boohoo has struggled as its adjusted profits crashed by 58% to 35 million pounds. It warned that its profit margins will crash to between 3% and 5%. That was lower than the previous guidance of 4-7% range. Boohoo’s UK sales dropped by 6%.
Boohoo’s outlook is dire considering that UK inflation remains at historical levels. At the same time, competition from companies like Shein is rising. Returns have also increased sharply recently.
Still, there are some positive signs about Boohoo. First, despite the recent crash, Boohoo remains a popular company in the UK. According to SimilarWeb, Boohoo’s website ranks at position 8 in the fashion and apparel segment. It had over 19 million visitors in September. Its iOS and Android apps are also popular among users.
Meanwhile, Boohoo has become incredibly cheap. It has a market cap of more than 508 million pounds and a PS ratio of 0.3x. This is significantly lower than that of its key peers. As such, there is a likelihood that Boohoo can find an attractive foreign buyer.
Boohoo share price forecast
The daily chart shows that the BOO share price has been in a consolidation phase in the past few weeks. As a result, the stock is trading at the 25-day moving average. At the same time, the Relative Strength Index (RSI) has formed a bullish divergence pattern. In addition, the volume trends have been moving upwards recently.
Therefore, there is a likelihood that Boohoo share price will rebound in the coming days. If this happens, the next key resistance level to watch will be at 50p. A drop below the support at 35p will invalidate the bullish view.