​​​JD Wetherspoon share price – confident outlook prevails ahead of earnings

​​​JD Wetherspoon pre-tax profit forecast to decline

​Pub company JD Wetherspoon reports full-year earnings on 21 March. Revenue is expected to rise 5.6% to £2.03 billion, but pre-tax profits are forecast to drop 18% to £73.93 million.

​Recent strong performance

​Wetherspoons provided an update on trading for the 25 weeks to January 21, 2024, showing its slow but steady recovery from the pandemic is ongoing. Like-for-like sales during this period were 10.1% higher than the same period a year earlier.

​Breaking down the figures, bar sales led the way rising 11.8% year-over-year, with food sales up 7.9% and machine/slot income increasing 10.4%. The more recent 12-week like-for-like sales trend was even stronger at 11.1% growth compared to a year ago. Overall, Wetherspoon's total sales have grown by 8.4% in the year-to-date period.

​While these results demonstrate Wetherspoon's sales trajectory is firmly positive, the company reiterated that the hospitality industry as a whole "has seen a consistent but slow recovery following the pandemic." Cost pressures remain intense, with Wetherspoon citing labour and energy costs in particular as being "far higher than pre-pandemic" levels, despite some easing of general inflation.

​Wetherspoons expects to hit forecasts

​Looking ahead, JD Wetherspoon stated it expects full-year financial results to be in line with current market expectations. The pub chain had previously projected breakeven to low single-digit profit before tax for the full 2023/24 fiscal year.

​Wetherspoon's founder and chairman Tim Martin said the company is "concentrating on the key strengths of the business: referring to its affordable pricing, wide range of drinks and pub food, and commitment to outstanding customer service. With over 800 locations across the UK and plans to open several new pubs this year, Wetherspoon remains optimistic about its prospects despite the challenging operating environment.

​Analyst ratings for JD Wetherspoon

​Refinitiv data shows a consensus analyst rating of ‘hold’ for JD Wetherspoon with 2 strong buy, 2 buy and 7 hold – and a mean of estimates suggesting a long-term price target of 883 pence for the share, roughly 12% higher than the current price (as of 20 March 2024).

​Technical outlook on the JD Wetherspoon share price

​JD Wetherspoon’s share price has been capped by its 200-week simple moving average (SMA), now at 845.60 pence, over three weeks in late-January and early-February before slipping to its 751.50p late-February low. Since then it has managed to regain most of its losses but still trades down by around -2.5% year-to-date.

​JD Wetherspoon Weekly Candlestick Chart

​A rise and weekly chart close above the 200-week SMA and February peak at 845.60p to 862.5p is needed for a long-term bullish trend reversal to be confirmed. In this case the December 2020 low and the January 2022 high at 960.0p to 989.5p would be in focus.

​JD Wetherspoon Daily Candlestick Chart

​Friday’s H1 results may add some volatility to the JD Wetherspoon’s share price which once again oscillates around the 55-day SMA at 808.5p.

​While the October-to-March uptrend line at 775p and, more importantly, the late-February low at 751.5p underpin, medium-term upside pressure should remain in play.

​Were the 751.5p low to be fallen through, though, the September highs at 742.5p to 734.5p may be revisited but would be expected to hold. If not, the 200-day SMA at 724.2p may be revisited.