​​​Sainsbury’s share price breaks out to fresh one-year high​​​

​​​Sainsbury’s share price continues to surge

​It has been a good year so far for Sainsbury’s. The supermarket has seen its share price surge to its highest level since the beginning of 2022, outperforming the FTSE 100 by a wide margin.

​Crucially, it has been able to achieve cost cuts even as inflation drives prices higher, and this has helped Sainsbury’s to remain competitive in the cut-throat UK supermarket environment. As the middle-bracket retailer, it has seen customers from Waitrose and others ‘trade down’ to Sainsbury’s, looking for lower prices without sacrificing too much quality.

​​On the flip side, it has lost some customers to its cheaper rivals, but this has not been as bad as feared. £500 million invested in pricing has helped retain consumers that might otherwise have opted to move to rivals like Aldi and Lidl.

​Sainsbury’s share price – valuation and outlook

​At around 11 times earnings, the shares are hardly expensive, though the valuation has climbed from the October lows. The market’s positive view on the shares has been reinforced by the dip buying seen in December and March, when weakness was seized upon by those looking to join the rally.

Refinitiv data shows a consensus analyst rating of ‘hold’ for Sainsbury’s with 1 analyst rating the company as a strong buy, 2 as a buy, 4 as a hold and 3 as a sell with the median of estimates suggesting a long-term price target of 250 pence for the share, nearly 13% lower than the current price (as of 19/04/2023).

Sainsbury’s share price – technical view

The Sainsbury’s share price is trading at levels last seen in February 2022 whilst rising towards the psychological 300p mark and the January 2022 peak at 303.60p, both of which represent the next upside target zone while the six-month uptrend remains intact.

Sainsbury's weekly chart

This will remain the case, provided that the late March low at 245.2p holds on a weekly chart closing basis.

On the daily chart, the Sainsbury share price has finally managed to overcome its late March and previous April highs at 280.4p to 281.8p, through which a continuation triangle trendline can be drawn, and a rise above which would produce a technical upside target of around 293p.

Sainsbury's daily chart

The short-term uptrend will remain valid while the 6 April low at 271.5p underpins on a daily chart closing basis.

Were this level to be slipped through, the 55-day simple moving average (SMA) at 266.2p and also the October-to-April uptrend line at 259.3p may be reached.