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Boohoo’s share price has been gradually recovering in recent weeks as investors show renewed interest in the company’s growth prospects. The stock reached a high of 49.53p, its highest level since September 2, marking a more than 54% increase from its lowest point this year. This recovery has brought Boohoo’s market capitalization to over £586 million.
Boohoo, a prominent UK-based fast fashion company, operates in the UK, US, and various European countries. However, the company has faced significant challenges in recent years. Competition in the industry has intensified, particularly from rivals like Shein. Additionally, Boohoo’s profit margins have been squeezed by rising inflation in the UK and other markets. The company’s growth has slowed, leading to multiple downgrades in its financial guidance. Furthermore, Boohoo has struggled with declining profitability, increased product returns, and longer delivery times.
Despite these challenges, Boohoo’s share price has begun to recover as some investors see potential value in the stock after its steep decline. The belief is that Boohoo, a company that has weathered a significant downturn, still holds profitability potential. Additionally, there are indications that shipping costs are stabilizing and cotton prices are starting to decrease.
However, analysts remain cautious about Boohoo’s prospects. Last month, Deutsche Bank lowered its price target for Boohoo from 140p to 36p. Similarly, analysts at Barclays, JP Morgan, and Jefferies have also downgraded their forecasts for the stock.
Nevertheless, my previous prediction for Boohoo has been accurate. I anticipated that the stock would see short-term gains, and since then, it has risen by more than 30%.
The four-hour chart reveals that Boohoo’s stock has been on a strong upward trend in recent weeks. It has climbed above the 25-day and 50-day moving averages and broken above an ascending trendline. The MACD indicator has crossed into positive territory, and the stock has formed an inverted head and shoulders pattern—a bullish signal in technical analysis. Therefore, it is likely that Boohoo’s stock will continue to rise, with bulls targeting the next key resistance level at 60p. However, a drop below the support level at 43p would invalidate this bullish outlook.