Johnson Service Group (LSE:JSG) made headline news when they reported higher-than-expected profits for the current fiscal year. The company will be releasing its half-yearly result for the year ending 30 June 2023. And the company’s revenues are expected to be at £215m, up from £176.2m the previous year1.
While the company’s operations are progressing, let’s discuss the future of the Johnson Service share price.
Key Points
- Johnson Service Company reported higher-than-expected profits for the current fiscal year.
- Johnsons Hotel linen segment has shown considerable progress in recent months.
- Analysts have shown a positive response toward the Johnson Service share price prediction.
What does Johnson Service do?
Johnson Service Group provides high-quality textile rental and related services across a range of sectors throughout the UK.
Their business segments include:
- Johnsons Workwear
- Johnsons Hotel Linen
- Johnsons Hotel, Restaurant & Catering Linen
- Johnsons Restaurant & Catering Linen
Johnsons Hotel linen segment has shown considerable progress in recent months. In fact, it is one of the main contributing factors toward the increased yearly revenue forecast for the year. Moreover, continuous investment in the company’s plant is increasing efficiency and capacity to facilitate further growth.
The bull case for the Johnson Service share price
Johnson Service shares went bullish after hitting the low of 79p in September 2022. The Johnson Service share price picked up pace and continued its bullish pattern till May 2023. The bullish trend came to an end when the price reached 123.8p. during this bullish period, the stock appreciated by 56.7%.
The superior customer service of Johnson Service has been a great strength of the company. At least, that’s what I think. Moreover, the set of products and services the company offers has resulted in high customer retention and lower marketing costs. As a result, the company has managed to earn a loyal clientele.
The bear case for the Johnson Service share price
Johnson Service’s share price suffered a sharp decline in February 2022. From the peak price of 162p, the stock dropped to 114.6p. The concerning fact for investors here was that this declining trend continued for the next months. The bearish period continued till the textile company’s share dropped to the low of 79p. During this bearish period, the stock lost more than 50% of its value.
While the company has been able to build a strong customer base, the suppliers are not that loyal. Moreover, with the fierce competition in the industry, the textile company needs to be very vigilant to keep up with the changing needs and demands of the industry.
Johnson Service Share price prediction
Analysts have shown a positive response towards the Johnson Service share price prediction and expect the share to outperform. The 12-month forecast shows a price target of 150p, with a high estimate of 170p and a low estimate of 120p.
Compared to today’s valuation, that suggests that analysts believe there is some growth potential ahead of this business. However, it’s important to remember that share price predictions aren’t guaranteed results. And the stock may end up severely underperforming expectations.
Should I buy Johnson Service shares today?
Johnsons Service Company is focusing on future growth and profitability. Not only they are expanding their business, but they are also steadily moving towards cost reduction. As a result, this year’s profit forecast is already reflecting this growth.
In addition to this, the company’s management anticipates many opportunities to strengthen its current position in the market and enhance its competitive advantage.
I believe this is great news for investors. And providing that the firm can keep up the pace, I believe the Jonsons Service share price has the potential to explode in the long run. Therefore, I’m considering adding this business to my portfolio today.
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Article sources
- London South East, “Johnson Service expects annual profit beat after strong half-year“
Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.
