Boohoo Share Price Consolidates Ahead of Earnings

Summary:
• Boohoo stock dropped after Asos published weak results last week as UK consumer confidence declined for four months straight.

The Boohoo share price has moved sideways in the past few days as investors wait for the company’s upcoming trading update. The BOO shares are trading at 88.38p, where it has been recently. However, it is still about 77% below its highest level in 2021. Other UK fashion stocks like Asos and Next PLC have also declined. ASOS share price has dropped to the lowest level since April 2020.

Boohoo stock dropped after Asos published weak results last week as UK consumer confidence declined for four months straight. The company’s sales rose by just 4% to 2 billion pounds in the first six months of the year to February 28. Its adjusted pretax profit fell by 87% to 14.8 million pounds as it warned about the challenging business conditions. Historically, companies in the same sector tend to move in the same direction.

Therefore, analysts expect Boohoo to publish weak results when it publishes its earnings on May 4th. Nevertheless, they expect that the company’s sales for the year ending in February were 1.96 billion pounds. That growth will represent a 13% year-on-year increase if they are accurate. They also expect that its adjusted EBITDA was 125 million pounds while EBITDA margin was6.4%.

The outlook of the Boohoo share price is uncertain, considering that competition and the cost of doing business are rising. Also, consumer confidence, an indirect gauge of spending, has declined as the cost of living rises. On the other hand, there are expectations that the company could be acquired soon.

Boohoo share price forecast

The daily chart shows that the BOO stock price has moved sideways in the past few days. As a result, the shares are trading at the same level as the 25-day and 50-day moving averages. As a result, the Relative Strength Index (RSI) and the Average True Range (ATR) are seen as low volatility. 

Therefore, at this stage, the outlook of the stock is neutral. However, while the company will publish weak earnings, there is a likelihood that the stock will bounce back since the situation has already been priced in.