AO World looks for better performance at upcoming earnings

[MongiIG]

AO World is looking to put recent weakness behind it when it reports earnings this week.

Source: Bloomberg

 

Price Moving average

 Chris Beauchamp | Chief Market Analyst, London | Publication date: Monday 20 November 2023 15:27

Is AO World back on track?

AO World has indeed shown signs of recovery since July, when it reassured investors that it had resolved its issues and was back on track. The company, reported a full-year pre-tax profit of £7.6 million, while on an underlying basis, profits nearly doubled to £45 million.

This positive performance has given AO World the confidence to express its ambition of achieving an underlying profit of 5% of sales in the short and medium term. With last year's turnover standing at £1.4 billion, this target implies a potential profit increase of at least £57 million.

Investors will be eagerly awaiting the company's interim results for the six months ended 30 September 2023.

Analyst ratings for AO World

Source: Refinitiv

Refinitiv data shows a consensus analyst rating of between ‘buy’ and ‘hold’ for AO World – 2 strong buy, 2 hold and 2 sell - with the mean of estimates suggesting a long-term price target of 83.67 pence for the share. It is where the share is trading as of 20 November 2023.

Technical outlook on the AO World’s share price

The AO World share price, which has risen close to 50% year-to-date, has been range trading since July while so far remaining above its 200-day simple moving average (SMA) at 78.40 pence. It may be back in focus now, following last week’s failure at the share’s 94.20p one-month high.

AO World Daily Candlestick Chart

Source: TradingView

Were AO World’s share price to rise above 94.20p post its first half earnings results out on Tuesday, the July peak at 101.80p would be back in the picture. Further up lurks the January 2022 peak at 114.80p.

AO World Weekly Candlestick Chart

Source: TradingView

While the 200-day SMA, July and October lows and the 2022-to-2023 uptrend line at 78.40p to 76.25p underpin on a weekly chart closing basis, the long-term uptrend in the AO World share price will remain intact.

 

 

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