Hotel Chocolat Stock Price Ignores Coronavirus, Up Nearly 10% On Double-Digit Growth in Sales

Shares of Hotel Chocolat trade almost 10% higher this morning in London after the group posted a better-than-expected half-year sales thanks to new store openings in the UK and globally.

Fundamental analysis: Revenue surpasses £90m

Hotel Chocolat, a British chocolatier and cocoa grower, with more than 70 shops in the UK, reported a revenue increase of £91.7m for the first half of the year, up 14% compared to a year earlier, on the back of the new store openings in the UK and internationally.

The company also reported underlying EBITDA at £18.5m, an increase of 7% compared to a year ago, while profit before tax grew also 7% to £14.9m.

Hotel Chocolat opened 9 new shops in the United Kingdom, in addition to two in the US and three in Japan. Sales of one of its flagship products, a hot chocolate maker Velvetiser, grew around 200% compared to the previous year.

Technical analysis: Earnings may fuel a recovery

Shares of Hotel Chocolat have recovered a portion of losses as the company’s market value decreased more than 20% in the last three weeks. As seen in the photo below, the price action gapped higher this morning on the positive earnings report.

The bulls will want now to test the 200-DMA (the red line) at 427, ideally today, and explore the possibility of having a daily close above this level, which would pave the way for a test of the February high at 490.

On the downside, the price is supported by the 100-DMA at 397 (the blue line) in case the worsening risk sentiment prevails over the positive earnings report.

Summary

Hotel Chocolat stock price is trading nearly 10% higher this morning in London despite the wider market turmoil fueled by coronavirus fears. Shares of the company previously lost more than 20% in the last three weeks, as the bulls now hope to erase those gains on the back of the positive earnings report.