Currys aims to report strong numbers at earnings this week

Can Currys reverse its fortunes amid Thursday’s half-year earnings?

Currys Plc has seen its share price drop by more than two-thirds over the past two years. The group will be hoping that a better performance at this week’s half-year results can provide some respite.

UK retailer Currys is in need of a strong peak season, including the recently concluded Black Friday, in order to rebuild its profit margins, generate cash flow, and prepare for any potential increase in consumer spending. The company has been hit by the decline in spending by UK consumers, as well as a decrease in consumer confidence and a price war with competitors in its Nordic region.

Currys can benefit from the proceeds of approximately €200 million from its Greek business, which can be used to strengthen its balance sheet and reduce its net debt of £97 million and pension deficit of £249 million. By improving its financial position, Currys will be better equipped to weather any potential challenges and uncertainties in the market.

Furthermore, demonstrating progress towards achieving its 3% margin target is essential to support the company's valuation. This means that Currys needs to show evidence of implementing effective cost reduction strategies and improving profit margins.

Lastly, a turnaround in the Nordic division would greatly contribute to achieving the 3% target. Implementing cost-cutting measures and focusing on margin improvement in this division can significantly enhance overall profitability.

Analyst ratings for Currys

Refinitiv data shows a consensus analyst rating of ‘hold’ for Currys – 2 strong buy, 1 buy, 3 hold and 3 sell - with the mean of estimates suggesting a long-term price target of 66 pence for the share, 45% above the current share price as of 11 December 2023.

Technical outlook on the Currys share price

The Currys share price, which has fallen by around 20% year-to-date, the week before last managed to bounce off its October low which acted as support at 43.02p.

Currys Weekly Candlestick Chart

A minor bounce has taken it to last week’s high at 48.56p, still below its long-term downtrend line at 48.92p and the technically more significant November peak at 51.60p, though. The 51.60p high would need to be exceeded for a bottom to be formed on the daily chart. Unless this is the case, the 2021-to-2023 downtrend will remain in play.

Currys Daily Candlestick Chart

Even if a rise and daily chart close above the November high at 51.60p were to be seen, the 200-day simple moving average (SMA) at 53.05p and the late June and July highs at 55.50p to 56.35p are likely to prove difficult to overcome.

A drop through the October-to-December lows at 43.08p to 43.02p would lead to a new all-time record low in the Currys share price with the July-to-December support line at around 42p representing a possible downside target, together with the 40p region.