Bid Corporation Limited (JSE: BID) has been on an upward trajectory for three consecutive days since unveiling its latest interim earnings report. The South African food services giant revealed a remarkable 24% surge in revenue, reaching R113.8 billion, while its headline earnings per share leapt by an impressive 18.6% to 1,152.4 cents per share.
In their commentary, management lauded the company’s strong performance in the face of a turbulent global economy marked by what they described as ‘anaemic, stagnant, and sometimes negative economic growth.’ They also addressed challenges stemming from delays caused by disruptions in Red Sea shipping, which impacted shipping costs. However, CEO Bernard Berson assured stakeholders that these costs were significantly lower compared to the disruptions experienced last year coming out of the COVID pandemic.
Looking ahead, Bid Corporation aims to bolster its growth initiatives by embracing advancements in artificial intelligence (AI). The company sees AI as a tool to unlock opportunities for maximizing sales, optimizing margins, and enhancing inventory management. These strategic investments in AI are poised to drive operational efficiency and propel Bid Corporation’s growth trajectory into the future.
Technical
On the daily chart, a breakdown recently occurred at the dynamic support of the ascending channel. However, following a brief retracement, the bulls seem to be gaining the upper hand once more. Resistance at R459.25 is currently in play as the upward momentum teases at an additional move higher.
If the price closes above this level in the upcoming session, it could confirm a false channel breakdown. The next hurdles to the ascent could be the resistance established at R469.00 and R478.74. If the price fails to pull back from this level, a continuous ascent could result in convergence with the 161.8% Fibonacci extension at R513.16 in the upcoming sessions.
However, if the price falls below the R459.25 resistance, the breakdown could get confirmation from an additional leg lower toward R446.33. At this level, the price has shifted below the 25-SMA (green line), confirming the bearish shift in the shorter-term momentum that could lead the price toward the Fibonacci midpoint at R436.78, where the 50-SMA (blue line) converges for psychological support. If the bulls still fail to initiate a retracement at this level, the 61.8% Fibonacci golden ratio could be worth watching at R426.92.
Summary
Bid Corporation has maintained a steady upward trajectory following the release of its latest interim earnings report. Resistance at R459.25 could be critical in the upcoming session, as a close above this threshold could confirm a fake-out from the prior breakdown at the ascending channel.
Sources: Koyfin, Tradingview, Reuters, Bid Corporation Limited
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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