FirstGroup share price technical analysis after going parabolic

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on Jun 8, 2023

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FirstGroup share price technical analysis after going parabolic

FirstGroup stock surged on Thursday after the company published strong results.
It reported encouraging results despite the recent strikes in the industry.
The company also announced an additional share repurchase deal.

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FirstGroup (LON: FGP) share price went vertical on Thursday after the transport company published strong financial results despite challenges. The stock surged by 20% and reached a high of143p, the highest point since May 26th this year. In all, the shares have surged by over 46% in 2023.

FirstGroup strong results

FirstGroup, the leading transport company in the UK, published strong financial results, helped by its First Bus and First Rail business. The company’s gross profit more than doubled to more than £82.1 million even after the strkikes experienced recently.

First Group’s revenue for the year was over £4.7 billion, down from the £5.6 billion it made in the previous year. As a result, the company announced an additional buyback of over £115 million. These funds from its North American exit.

Looking ahead, FirstGroup believes that its business will do well this year even as conditions remain challenging. It is also continuing its investments in the electrification of its bus fleet at a cost of over £130 million this year. The CEO said:

“ In First Bus, we are seeing the benefits of actions we have taken to transform the business, and we are establishing ourselves as leaders in decarbonisation as we accelerate the electrification of our bus fleet to deliver value not just for FirstGroup but for all our stakeholders.”

So, is FirstGroup a good investment? The company has done well in the past few months as business conditions have remained challenging. For one, the cost of doing business is expected to keep rising. On a positive side, the company is benefiting from the moderating fuel prices in the UK.

The daily chart shows that FGP stock price was in a consolidating phase since May. In this period, the shares were trading between 127.1p and 109.9p. It then made a strong bullish breakout after it published strong results.

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FirstGroup has moved above the 25-day and 50-day exponential moving averages (EMA). It is also trading at 138.3p, the highest point on August 8th. The Relative Strength Index (RSI) has jumped above the overbought level.

Therefore, I suspect that the stock will now consolidate in this level and then retest the key support at 127.1p. A move above 142.7p will signal that there are more buyers in the market, which could see it jump to 150p.