Barclays argues that Wm Morrison Supermarkets (LON:MRW) could stand to benefit from the recently announced tie-up between rivals Sainsbury’s (LON:SBRY) and Asda, Proactive Investors reports. The comments come after Morrisons updated investors on its quarterly performance last week, reporting a rise in like-for-like sales and reiterating its full-year expectations.
Morrisons’ share price has slipped into the red in today’s session, having lost 0.83 percent to 251.50p of 13:19 BST, underperforming the broader London market, with the FTSE 100 currently standing 0.21 percent lower at 7,708.36 points. The grocer’s shares have added nearly four percent to their value over the past year, largely in line with the benchmark index.
Barclays flags merger benefits
Barclays, which has an ‘underweight’ rating on Morrisons, lifted its price target on the shares from 205p to 210p today, following news that Sainsbury’s had agreed a merger deal with Walmart’s Asda.
“The Sainsbury/ASDA merger proposal makes us less concerned at the near-term risk of a step-up in aggression from ASDA,” the broker’s analyst James Anstead said in a note to clients, as quoted by Proactive Investors. “While we expect Morrison to remain very disciplined on capital, we can easily imagine that the company could be well-placed to pick up a number of forced store disposals at reasonable (though probably not bargain) prices.”
The comments come after new research suggested last week that at least 73 supermarkets will have to be sold for the proposed merger to be given the go-ahead by competition regulators.
Other analysts on blue-chip grocer
The 13 analysts offering 12-month price targets for Morrisons for the Financial Times have a median target of 240.00p on the shares, with a high estimate of 275.00p and a low estimate of 195.00p. As of May 11, the consensus forecast amongst 19 polled investment analysts covering the blue-chip supermarket advises investors to hold their position in the company.