The Boohoo share price is rising today as investors react to the strong earnings by Asos, the online fashion group. BOO stock has jumped by 0.5% to the current 343p, which is 10.75% above the lowest level in March this year. Asos share price has risen by about 0.80%.
What happened: Boohoo and Asos are the two biggest online fashion companies in the UK. The two have a market cap of more than 4.3 billion pounds and 5.78 billion pounds, respectively. The companies have done relatively well during the coronavirus pandemic, which has pushed many of their competitors out of business.
More people have also embraced online shopping for fashion. The chart below shows the performance of Boohoo and Asos share prices in the past 12 months. Boohoo has underperformed because of the recent scandals faced by the firm.
Boohoo has underperformed Asos
Today, the Boohoo share price is reacting to the strong results by Asos. The company said that its active customers rose by 1.5 million to 25 million in the past year. It made an adjusted profit before tax of 112.9 million pounds, up from 30.1 million a year before. This profit included the cost of its acquisition of Arcadia brands like Topman and Toshop. Therefore, analysts expect that Boohoo too will report strong earnings.
Meanwhile, Boohoo is cutting the number of its UK suppliers as it deals with last years concerns. It is also investigating the issue of pricing across its brands.
Boohoo share price forecast
The four-hour chart shows that the Boohoo share price has formed a parallel channel in the past few weeks. At the current price, the stock is slightly below the upper side of this channel and is slightly above the 25-day and 15-day moving averages. It is also about 10% below its highest level this year. Therefore, in the near term, the stock will likely remain inside this channel and then break out higher as bulls attempt to test the YTD high.
BOO stock price chart