Tesco share price slides despite positive broker view

Tesco’s (LON:TSCO) share price dipped in afternoon trading today, while broker Bernstein maintains that the recovery under new chief executive Dave Lewis was on track. Retail analysts Bruno Monteyne and Richard J Clarke of Bernstein Research said in a note issued to clients today that while recent Kantar Woldpanel data indicated slowing progress at Tesco, this was not a sign that Lewis’ turnaround plan was stalling.

“Evidence points to a new range of targeted, strategic & selected prices cuts bringing the own label price gap on own label vs Aldi from 24% to 11%,” the analysts remarked, adding that these positive moves indicated the recovery plan at Tesco was “sustainable”. “The discussion now rightly is about ‘how high can long term margins be in the UK’, ‘how long will it take’ and ‘what are the odds of success’,” Monteyne and Clarke said. According to them, Tesco’s turnaround will take longer than seven months.
Bernstein reiterated its ‘outperform’ rating on Tesco’s shares. The broker currently has a 285p price target on the stock. By 15:20 BST, Tesco’s share price had fallen 1.39 percent to 224.25p.
The retailer’s stock plunged to an 11-year old low in December, following the revelation of a £263 million profit overstatement. Last month, the FTSE 100-listed group posted an annual loss of £6.4 billion, reflecting a dire year for the grocer. Although this recent developments continue to weigh on investor sentiment, Tesco’s share price is gradually recovering, having gained over 20 percent since the start of the year.
As of 15:50 BST, Friday, 15 May, Tesco PLC share price is 224.47p.