Tesco share price dips while Marks & Spencer share price drops sharply

Tesco share price dips while Marks & Spencer share price drops sharply

Both Tesco and M&S have reported strong sales figures over the festive period, with Tesco raising its profit forecast for the full year. Tesco's sales were boosted by strong demand for fresh goods and its premium Finest range, while M&S saw robust demand in both its food and clothing businesses.

However, M&S has warned of an uncertain outlook for the coming year, citing consumer and geopolitical risks. Despite the positive sales figures, M&S shares fell more than 5% in early trade.

Tesco also announced price cuts on nearly 2,700 products to compete with discount rivals. Overall, Tesco expects its retail operating profits to reach £2.75bn for the full year, exceeding its previous guidance range. Tesco shares initially opened higher off the back of the upgraded profit forecast, but have since lost ground slightly.

As the big winner of 2023, it was perhaps difficult for M&S to release any kind of statement to drive its shares higher. Instead, investors continue to trim their holdings for the time being. Meanwhile, Tesco, which did see a share price rally in 2023, perhaps has more upside ahead of it, thanks to the increased market share.

Technical analysis on the Marks & Spencer and Tesco share price

The Marks & Spencer share price has taken a hit, gapping lower on Thursday and reaching the mid-November high at 260.5 pence which, together with the mid-December low at 254.0p may offer support.

Marks & Spencer Daily Chart

Were the above mentioned support zone to give way, the September peak with the late-November low at 246.4p to 245.9p may offer support instead. Further down the March-to-January uptrend line can be spotted at 236.2p.

For the Marks & Spencer share price to resume its long-term ascent from its October 2022 low, this week’s price gap at 271.1p to 276.4p would first of all need to get filled. If so, this week’s high at 293.2p, together with the minor psychological 300p mark, may be back in play.

With regards to the Tesco share price, despite also taking a beating on Thursday, it remains within a clearly defined medium-term uptrend and will continue to do so while the August-to-January uptrend channel support line at 287.8p underpins.

Nonetheless Thursday’s failure to overcome the current January high at 303.7p before reversing to the downside does point to at least an interim top being formed with the May peak at 285.3p representing the first downside target.

Tesco Daily Chart

Below the uptrend channel support line at 287.8p the October and November peaks and late-December low at 287.0p to 283.6p may offer support, if revisited at all.

The long-term bullish trend in the Tesco share price will remain valid while the share stays above its December trough at 277.8p.

Analysts recommendations

Fundamental analysts are rating Marks & Spencer as a ‘buy’ with Refinitiv data showing 4 strong buy, 6 buy and 8 hold - with the mean of estimates suggesting a long-term price target of 243 pence for the share, roughly 10% above the share’s current price (as of 11 January 2024).

They are also rating TESCO as a ‘buy’ with Refinitiv data showing 3 strong buy, 8 buy, 3 hold and 1 sell - with the mean of estimates suggesting a long-term price target of 322 pence for the share, roughly 9% above the share’s current price (as of 11 January 2024).