Dis-Chem Pharmacies Ltd (JSE: DCP) has emerged as a beacon of strength in the pharmaceutical sector, boasting a commendable 6% year-to-date surge in its share price.
The company’s recent trading statement paints a picture of resilience and growth, as evidenced by its robust showing in the first five months of the second half. Highlighted by a remarkable double-digit increase in group revenue, Dis-Chem’s success story is underscored by its ability to navigate challenges and capitalize on opportunities.
With a notable 12.2% revenue growth compared to the previous comparable period, the company’s retail, wholesale, and external businesses have all contributed significantly to its upward trajectory. The wholesale segment’s stellar performance is particularly impressive, boasting a striking 20% revenue growth driven by innovative service offerings and the acquisition of new clientele. Meanwhile, Dis-Chem’s stronghold in the retail segment remains unyielding, maintaining its position as South Africa’s largest retail pharmacy group by dispensary market share.
As investors eagerly anticipate the release of Dis-Chem’s annual results for the fiscal year ending 29 February 2024, slated for announcement on Friday, 31 May 2024, all eyes are on whether the company’s underlying fundamentals can sustain its compelling investment narrative. This eagerly awaited update promises to offer valuable insights into Dis-Chem’s trajectory and potential for future growth, shaping investment decisions in the pharmaceutical landscape.
Technical
Dis-Chem Pharmacies’ price action reflects a compelling uptrend, with the stock trading above its 100-day moving average and within an ascending channel pattern, indicating bullish momentum.
Notably, in late January 2024, a significant volume of 53 million shares was traded, signalling heightened interest from buyers. Consequently, the share price surged from its January peak, finding support at R28.70 per share, coinciding with the lower boundary of the ascending channel.
However, as the price climbed to R34.13 per share, it encountered resistance amid overbought RSI conditions, triggering a retracement to the 38.20% Fibonacci Retracement level. Should selling pressures persist, attention may shift to the 50% retracement level as a potential downside target. Conversely, a resurgence in upside momentum could propel the stock towards a retest of the R34.13 per share resistance level.
Summary
In conclusion, Dis-Chem Pharmacies demonstrates robust growth in revenue, driven by both retail and wholesale segments. With an uptrend in stock price, attention centres around key technical levels, such as the R28.70 support and R34.13 resistance, shaping investor sentiment as the annual results approach.
Sources: Dis-Chem Pharmacies Ltd, MoneyWeb, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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