The Tesco share price has gone nowhere in the past few months. The stock is trading at 233.60p, where it has been in the past few days. It has been in this range since April this year and is about 6.7% below the highest point this year.
Tesco fundamental analysis
Tesco is a leading British supermarket chain that operates more than 4,000 stores in the UK. The firm is the biggest supermarket by store count and market value. It has a total market capitalization of more than $25 billion. It is followed by Sainsbury’s that is valued at more than $9 billion. In addition to its grocery stores, Tesco runs its fast-growing e-commerce platform, gas stations, and Tesco bank.
The Tesco share price has struggled in the past few weeks even as other retail stocks have thrived on acquisition rumours. Morrisons has already been acquired leaving Sainsbury’s as the next viable acquisition target. Because of Tesco’s large size, many analysts believe that it will not receive a bid.
So, is the company a viable company as an independent company? Fundamentally, the firm is a good company because of its strong market share in the UK. It has also shed most of its loss-making foreign operations. The company will also benefit as the UK economy reopens. This is evidenced by its recent trading statement. The firm said that its revenue rose by 1% to 13.36 billion pounds in the first quarter.
Still, the firm faces some challenges. For one, as the economy reopens, there is a possibility that more British shoppers will have a choice of other retailers. Also, there is a likelihood that its e-commerce operations will show some weakness. At the same time, the company is facing higher employee costs. Recently, it was forced to increase salaries to drivers in a bid to attract talent.
Tesco share price forecast
The daily chart shows that the TSCO stock has been in a tight range recently. The stock is slightly above the 38.2% Fibonacci retracement. It has also formed an ascending channel that is shown in black and is hovering at the upper side of the channel.
The shares have also formed what looks like a head and shoulders pattern. Therefore, in August, there is a possibility that the stock will decline to the lower side of the channel at around 225p. This view will be invalidated if it moves above the July high of 240p.