Tesco share price: US law firms line up investors to sue supermarket

on Nov 10, 2014
Updated: Apr 9, 2020
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iNVEZZ.com, Monday, November 10: US law firms are lining up investors willing to sue Tesco (LON:TSCO), following the retailer’s discovery of accounting irregularities, the Financial Times has reported.

US law firm Scott & Scott says it is in talks with several European institutional investors about filing legal claims against Tesco after it emerged in September that the retailer had misstated its profits by £263 million ( Tesco share price plummets on profit warning ).
David Scott, a partner at the law firm, said, as quoted by the FT yesterday: “There has been a tremendous amount of interest both in the US and among UK investors in obtaining more information about [Tesco claims]. I have spoken to asset managers and pension funds in the UK and on the continent. Several European clients are asking us to look at their holdings and determine where the best forum for them to file a class action would be.”

Tesco has declined to comment on the matter.
*h*Share price rallies on analyst comments*h*
In contrast to rival J Sainsbury (LON:SBRY), which has been heading south on worries about a dividend cut ( Sainsbury’s share price: Grocer to slash dividend to gain competitive edge ), Tesco’s shares have risen over four percent so far today. As of 14:20 GMT, the stock was trading 4.26 percent higher at 192.30p.

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The increase came as analyst Bruno Monteyne at Bernstein Research turned more positive on Britain’s largest supermarket. In a note entitled ‘Time to Dip Toes in Water. Little They Can Do Wrong in Next 2 Years That Isn’t in Price Yet”, he said today that it was less likely now the supermarket group would need a cash call, while cutting costs and prices would fix many of its problems. He said: “[The] current share price of Tesco implies ‘a rights issue is around the corner’ and ‘the business can’t be fixed’. Both are possible but the near certainty of both events in the share price doesn’t make sense to us”.

The rally followed a steep decline over the past month, with investor sentiment hurt by the group’s accounting error disclosure. Last month, Tesco’s shares reached their lowest level in 11 years.
Of the 18 analysts projecting 12 month price targets for Tesco for the Financial Times, the median target is 187.50p, with a high estimate of 325.00p and a low of 145.00p.
According to the FT, as of 8 November 2014, the consensus forecast amongst 49 polled investment analysts covering the group has it that investors should hold their position in the company.
**As of 14:09 GMT, buy Tesco shares at 192.15p. **
**As of 14:09 GMT, sell Tesco shares at 192.10p.**

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