Boohoo share price forecast ahead of interim earnings

Boohoo (LON: BOO) share price has stabilised recently as investors wait for the upcoming interim results. The stock was trading at 32p on Monday, higher than the year-to-date low of 27.80p. 

Boohoo earnings ahead

Boohoo will be one of the top FTSE 250 companies to watch this week as the e-commerce company publishes its results. It will deliver its half-year results on Wednesday this week.

These results will come a few days after Asos, its key competitor published another set of weak earnings. In its statement, the company warned that weather and high inflation had an impact on its business performance.

Boohoo’s results will provide more colour about the company’s turnaround strategy and whether it is bearing fruits. It will also provide more information about the state of the economy as inflation remains high.

The last results showed that Boohoo’s revenue dropped by 17% in the six months to August to £729 million. Its gross profits also fell by 16% to £389 million while its adjusted EBITDA dropped by 12% to £31 million.

Traders and investors will watch several things in this week’s report. First, they will focus on the headline figures like revenue and profitability growth. Second, most investors will look at the overall operating costs. The most recent results showed that its operating costs dropped to £358 million.

Most importantly, traders will pay a close attention to Boohoo’s metrics like the number of active users and the performance of its American business. 

Boohoo’s turnaround will take time since it coincides with a period when the UK is going through stagflation. Economic growth has slowed while inflation is stuck above 6%. Therefore, discretionary spending has slowed, as evidenced by the recent weak retail sales data.

Boohoo share price forecast

BOO chart by TradingView

The daily chart shows that the Boohoo stock price has been in a tight range this month. It has stabilised after having a strong downward trend since August. The stock is consolidating at the 50-period and 25-period moving averages.

Also, the shares have formed a bearish flag pattern, which is shown in purple. The Relative Strength Index (RSI) and the MACD indicators have formed a bullish divergence. 

Therefore, because of the bearish flag, I suspect that the shares will have a bearish breakout after earnings. If this happens, the stock will likely retest the key support at 27.80p, the lower side of the flag pattern.