JPMorgan sees Tesco (LON:TSCO) as a better bet than FTSE 100 rival J Sainsbury (LON:SBRY), despite the latter’s merger deal with Asda, WebFG News reports. The comments are a boost for Britain’s biggest grocer, whose shares came under pressure earlier this week following the tie-up announcement.
Tesco’s share price has been little changed in today’s session, having added 0.26 percent to 235.60p as of 13:27 BST. The shares are marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.36 percent higher at 7,547.67 points.
JPMorgan sees Tesco as better bet
WebFG News quoted JPMorgan as commenting yesterday that there were too many uncertainties hanging over Sainsbury’s proposed tie-up with Asda to justify the price, and Tesco was a better bet. The analysts noted that there was no certainty that the Competition and Markets Authority (CMA) would approve the deal and if the watchdog required store disposals, there were no obvious takers. Tesco’s acquisition of Booker, on the other hand, has already been approved.
“We would rather buy Tesco, where there is no CMA risk, there is a new addressable market/avenue of growth and the combined businesses are in better shape,” the broker pointed out.
Other analysts on Tesco
In a separate development, Interactive Investor reported today that Tesco was among several UK names, along with Lloyds (LON:LLOY) and Vodafone (LON:VOD), on a 31-strong list of European ‘top stocks’ by UBS which together have the potential to deliver earnings per share growth far greater than the wider market. The analysts estimate that combined EPS growth across the years 2018 and 2019 is almost 15 percent, with Tesco set for one of the top performances at over 50 percent.