Tesco (LON: TSCO) share price is having a spectacular year as it approaches $300. The stock was trading at 287.70p on Friday, 55% above the lowest level in 2022. It is not alone as other British retail stocks like Marks & Spencer and Sainsbury’s have soared, with the latter moving to the highest point in over 22 years.

There are several reasons why Tesco stock price has jumped sharply in 2023. First, analysts have been quite optimistic about the company, which is the biggest retailer in the UK. In a note this week, analysts at Bernstein raised their outlook for the stock to outperform.

Similarly, Goldman Sachs, Jefferies, UBS, and Barclays have a buy rating on the company. In most cases, companies tend to do well when analysts are optimistic about a company. 

Second, the retail sector in the UK has remained quite stable even as the cost of living crisis has intensified. The most recent figures by BRC showed that retail sales rose by 2.7% in November. 

Third, Tesco is working to simplify its business operations by shedding its banking group which has over 5.3 million customers. Companies like Lloyds and Barclays are studying the business and could make an offer soon.

Lloyds is the most likely company that will acquire Tesco Bank because of its Telegraph windfall. The two banks are also complementary in nature since Lloyds has a big retail presence in the UK.

Further, Tesco’s financial results have shown that the company is doing well in a difficult market. Tesco’s revenues rose to 30.7 billion pounds in the last financial year from £28.4 billion in the previous year. Its retail free cash flow rose to £1.38 billion while its operating profit hit £1.48 billion. Tesco also gained its market share in the UK.

Looking ahead, Tesco will likely continue doing well because of the potential economic recovery in 2024. Inflation expectations have fallen while the consensus is that the BoE will start cutting rates in 2024. Tesco and other retailers thrive in such conditions.

TSCO chart by TradingView

On the daily chart, we see that the TSCO stock price has been in a strong uptrend in the past few months. This rally continued after the shares moved above the crucial resistance point at 274.3p, the highest swing in May. 

Additionally, the stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA). These are important bullish signs. However, the stock is slowly forming a rising wedge pattern. In price action analysis, this pattern ois one of the most bullish signs.

Therefore, the outlook for the Tesco share price is mildly bullish for now, which could push it to 300p. But because of the rising wedge, a bearish breakout cannot be ruled out. If this happens, the next price to watch will be at 274.3p.

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