Tesco share price is down for 8 straight days; Can it still climb to 282p?

Tesco share price is languishing, a week after the supermarket chain released a relatively modest quarterly update. The shares are down for the eighth straight day and are trading at the lowest level since April 8.

Tesco shares are down by more than 5% in the past one month. This is a slightly better performance than Sainbury share price that is down by 7%. It is worse than Morison’s and Ocado share prices that have dropped by 4.9% and 1% respectively. The FTSE 100 has dropped by just 4% in the past 30 days as shown below. So, is it worth to buy Tesco stock price now?

Tesco stock price vs peers
Tesco stock price vs peers

Analysts bullish on Tesco

Most analysts are bullish on Tesco, the country’s biggest supermarket chain. In recent updates, analyst at Morgan Stanley said that they were overweight the stock but dropped their target from the previous 285p to 276p. Other analysts that are bullish on the stock are from Berenberg Bank, Jefferies Financial Group, Shore Capital, UBS, and Citigroup.

Analysts at HSBC expect the Tesco share price to jump to 280p while those at Credit Suisse expect the shares to jump to 265p. In general, the average consensus price target is 282p, which implies a 30% upside from the current level.

Tesco stock forecast
Tesco stock price forecast

Why is Tesco share price languishing?

As mentioned above, Tesco reported a modest quarter. Its revenue increased by 8% to £13.4 billion. It had a like-for-like sales growth of 7.9%. However, this strong growth was affected by the underperformance of Tesco bank, whose earnings dropped by double digits.

Also, they were offset by a sharp increase in costs as the company invested more money in employing delivery staff. Also, the company did a good thing in exiting the lossmaking Polish business months after it exited Asia.

I think the stock is struggling because the UK economy is reopening further. As it does this, people will have more options to shop non-essential items. Most of the costs it talked about in the report will remain.

Also, Tesco share price is lagging mostly because of the rising competition from Ocado, the technology group. The company, which is now partnering with Marks and Spencer and other retailers. Finally, the likelihood of a no-deal Brexit and the border checks in Ireland are also hurting the stock.

Tesco stock price technical analysis

The daily Tesco share price shown below looks ugly. It has been painted red in the past eight days. As such, the price is below the 50-day and 100-day exponential moving averages while the RSI has moved closer to the oversold level. It is also below the 23.6% Fibonacci retracement level. Therefore, it seems like bears are now in total control, which will see the price continue to fall as they attempt to move to 205p.

On the other hand, a move above 220p will invalidate this trend. This price is along the lowest level on May 22, June 9, and June 26.

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Tesco share price forecast

Tesco share price

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