Tesco share price has staged a strong recovery since the start of the new year 2023 despite economic concerns in the UK. The TSCO stock has gained more than 10% in its year-to-date price. As of the time of writing, the stock was trading slightly higher at $249.2 after hitting an intraday high of $250.3.
TSCO’s Fundamental Outlook
Tesco share price has staged a strong comeback this year, jumping more than 27% from its lowest level in 2022 in October. According to its 2022 trading statement released later last week, Britain’s biggest supermarket said its sales rose in the third quarter. Even so, Tesco maintained its profit guidance steady, revealing that higher costs and fierce competition have been squeezing profits.
Tesco Plc has earned different recommendations from several brokerages in recent months. JP Morgan Chase & Co upgraded Tesco’s share price outlook from 240p to 270p on December 5, 2022, handing it an “overweight” rating. Shore Capital reaffirmed its “hold” rating on Tesco’s shares on December 14th.
European stock markets were muted earlier on Friday amid a decline in UK retail sales volumes. Data from Office for National Statistics, retail sales volumes fell by 1% in December 2022, following a 0.5% drop in November. Sales volumes were 1.7% below their pre-pandemic levels.
Non-food store sales slipped 2.1% over the month with continued feedback from retailers that customers have been cutting back on spending because of increased prices and affordability concerns. Food store sales volumes were down by 0.3% in December as retailers suggested that customers stocked early for Christmas.
Despite a cooldown in UK inflation, the inflation rate is still hovering around its highest level in 4 decades. This is among the main worries for Tesco Plc and other major stocks in the UK.
Tesco Share Price Forecast
The daily chart shows that the Tesco share price has been on a slow uptrend for the past few weeks. The stock has moved above the 50-day and 100-day moving averages. Its Relative Strength Index (RSI) has moved into the overbought zone, pointing to an increased demand for the stock.
Therefore, I expect the Tesco share price is likely to continue rising as bulls target the resistance level at 270p. On the other hand, a move below the support at 237.5p will invalidate this view.