After a rough few weeks, Woolworths Group Ltd (ASX: WOW) is suddenly back in demand.
The supermarket giant's shares are up 4.91% to $34.60 at the time of writing after one broker upgraded the stock.
It is a decent bounce after Woolworths lost almost 6% over the past month, as investors worried about softer margins and higher operating costs.
The stock has still had a strong start to the year, though, with the share price up around 18% in 2026.
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Broker turns more positive
The buying follows JPMorgan turning more positive on Woolworths after its recent pullback.
According to The Australian, analyst Bryan Raymond lifted his rating on Woolworths to overweight from neutral, with a price target of $37.00.
That implies potential upside of about 7% from the current share price, with JPMorgan seeing room for Woolworths to regain some ground.
The upgrade also comes after a difficult few weeks for Woolworths shareholders. The stock fell heavily after its third-quarter update in late April, when investors focused on margin pressure rather than the stronger sales result.
Woolworths reported group sales of $18.1 billion for the 13 weeks to 5 April, up 4.5% on the prior year. Australian Food sales rose 5.9% to $13.8 billion, while eCommerce sales grew 23.8%.
Those numbers showed customers are still spending through Woolworths, but the market was worried about what it costs to keep that sales momentum going.
Margin pressure has been the issue
Woolworths warned in its Q3 update that fuel costs and price investment would weigh on fourth-quarter earnings.
The company has also been trying to keep prices competitive as shoppers remain cautious with grocery spending.
Reuters reported at the time that Woolworths shares dropped after the company backed away from expectations that Australian Food earnings growth would land at the upper end of its previous range.
The report also noted cost pressure from fuel and efforts to absorb some supplier cost increases.
Nonetheless, the broker upgrade gives investors a more positive view to weigh against those concerns.
Buyers appear to be looking past the margin squeeze and focusing again on Woolworths' sales growth and defensive earnings base.
What the chart is showing
The chart is also worth a quick look.
Woolworths has bounced from recent weakness and is now trading back above $34. It remains below its recent highs, but today's move has pushed the stock closer to the upper end of its recent range.
The relative strength index (RSI) is around 49, which is not stretched. That suggests the stock is not sitting in obvious overbought territory after today's move.
The Bollinger Bands show the stock rebounding from near the lower band earlier this month and moving back toward the middle of the range.
