FTSE 250: A glimmer of hope for Currys' share price?

A glimmer of hope for Currys' share price?

Currys Plc has increased its earnings outlook for the year ending April 29th. The company has raised their forecasted profit from £104m to £110m - £120m due to stronger sales than expected in the UK and Ireland.

Although the company faces difficult trading conditions in the Nordic countries, progress is being made to reduce costs by £25m. Net debts for Currys are £100m, towards the lower end of their forecasted £150m. However, over the past two years, their debts have declined by 58%.

The company's new profit outlook is significantly lower than last year's £186m, which was due to store purchases and cost-cutting measures. Currys has warned that profits will remain lower in the future due to the cost-of-living crisis. The Scandinavian business of Currys faced surplus inventory after keeping prices the same while demand for goods slowed and rivals engaged in hefty discounting.

How to trade the Currys share price?

Refinitiv data shows a consensus analyst rating of ‘hold’ for Currys – 3 strong buy, 4 hold and 3 sell - with the median of estimates suggesting a long-term price target of 62.50 pence for the share, roughly 19% above where the share is trading (as of 27 June 2023).

Technical analysis on the Currys share price

In mid-June the Currys share price briefly made a new all-time record low at 48.78p, marginally below its 49.00p January 2003 low, before trying to regain some of its lost ground.

Currys Monthly Candlesticks Chart

Technically the share price continues to look bearish despite the past couple of weeks’ recovery as it is being thwarted by the late March to late May sideways trend and resistance band. It sits between the late March 53.40p low and the 60.20p mid-May high.

While 60.20p isn’t overcome, the medium-term downtrend remains entrenched with new all-time record lows remaining in the pipeline.

Currys Daily Candlesticks Chart

Failure at the late May and current June lows at 48.86p to 48.78p could lead to the minor psychological 30p mark being reached with even lower prices remaining a possibility.

The 161.8% Fibonacci extension of the November-to-December 2022 decline, projected lower from the March high comes in at 26.02p and as such represents another possible long-term downside target.

A bullish reversal and weekly close above the 60.20p mid-May high would put the 200-day simple moving average (SMA) at 63.95p back on the cards. This is roughly in line with what (fundamental) analysts are aiming for.