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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

​​WH Smith in cautious mood ahead of update

​​WH Smith needs to balance increased demand with rising costs in a cautious consumer environment.

Chart Source: Bloomberg

​​​WH Smith in cautious mood ahead of 9 November earnings

WH Smith reported a significant increase in annual revenue at its most recent update, driven by strong demand during the busy summer travel season. However, the company fell short of its recently raised profit forecast.

​The leisure travel sector has experienced a surge in demand since the easing of pandemic restrictions, leading to a global boom during the summer holiday period. Despite this positive trend, the sector continues to face challenges such as high costs and reduced passenger spending due to economic uncertainties.

​WH Smith had previously predicted higher full-year profit, citing a recovery in passenger numbers across its key markets. However, analysts now expect the company's profit before tax to reach an average of £143 million ($179.91 million) for the year, according to a consensus compiled by the company.

​While the increase in revenue is undoubtedly a positive development for WH Smith, the shortfall in profit highlights the ongoing difficulties faced by the travel sector. The company's performance reflects the broader challenges of balancing increased demand with rising costs and a cautious consumer environment.

​As the global economy stumbles through the aftermath of the pandemic, it is crucial for companies in the travel sector to carefully manage their operations and adapt to changing market dynamics. This includes finding ways to control costs while still providing a compelling offering to passengers. The ability to strike this delicate balance will be key to the sector's recovery and long-term success.

​Analyst ratings for WH SMITH

WH SMITH analysts ​Source: Refinitiv
WH SMITH analysts ​Source: Refinitiv

​Refinitiv data shows a consensus analyst rating of ‘buy’ for WH SMITH – 2 strong buy, 9 buy and 2 hold - with the mean of estimates suggesting a long-term price target of 1,864.17 pence for the share, roughly 56% higher than the current price (as of 06 November 2023).

​Technical outlook on the WH SMITH share price

​WH SMITH’s share price has been in the doldrums for much of the year with its share price slipping by around 22% year-to-date or by over 30% from its 1,729p February peak.

​WH SMITH Weekly Candlestick Chart

WH SMITH weekly chart ​Source: Tradingview
WH SMITH weekly chart ​Source: Tradingview

​The WH Smith share price is trying to find support slightly above its 1,110p October 2022 low, having last week slipped to 1,134p before attempting to bounce. Failure at 1,110p on a weekly chart closing basis could lead to levels last traded in November 2020 being reached with the psychological 1,000p mark representing a possible downside target.

​Earlier today the WH Smith share price tested its upper downtrend channel line at 1,223p. While it caps, immediate downside pressure should be maintained.

​WH SMITH Daily Candlestick Chart

WH SMITH daily chart ​Source: Tradingview
WH SMITH daily chart ​Source: Tradingview

For a bullish reversal to become likely a rise and daily chart close above the 9 October high at 1,305p would need to be seen, some 10% above current levels (as of 06 November 2023). While the share price remains below it, the May-to-November downtrend remains firmly entrenched.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

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