The Deliveroo share price continues to trade lower despite a growing market share and an investment bank upgrade.
Deliveroo Group Plc (LON: ROO) is down almost 10% this week as global indices digest the economic consequences of the Omicron covid variant. Logic suggests Deliveroo would perform well in the current environment, making the recent price action hard to fathom. Furthermore, JP Morgan analyst Marcus Diebel has upgraded ROO to overweight, lifting his price target to 392p from 332p. Strangely, even Diebel’s note, which said Deliveroo had overtaken rival Just Eat in London, Birmingham, Leeds and Manchester, could not light a fire under the share price. As a result, ROO is testing the 100-Day Moving Average and heading towards long-term trend support.
The daily chart shows Deliveroo briefly pierced the 100-DMA at 286.9p on Wednesday before recovering to end the session at 290.1p. If the price fails to hold above the 100-DMA, I expect an extension lower towards the rising trend line at 273p.
As long as ROO remains above the trend support, its longer-term prospects are intact. However, I would consider a close below 273p as bearish. In that event, the October low at 263p is the first downside target. At the same time, a deeper sell-off could extend towards the 225p all-time low.
In my view, the recent sell-off appears overdone, considering the possibility of lockdowns and the bank upgrade. Therefore,I expect the uptrend to prevail, targeting last week’s 327.5p high. However, a close below trend support invalidates this thesis.
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This post was last modified on Dec 02, 2021, 06:26 GMT 06:26