Tesco share price: Shore Capital reiterates ‘hold’ rating

Shore Capital continues to see Tesco (LON:TSCO) as a ‘hold,’ noting that Britain’s biggest supermarket is underperforming in Ireland. The comments follow industry data which showed that the UK grocer’s market share in the country had dipped in the past few weeks.

Tesco’s share price rose in yesterday’s session, adding 1.87 percent to 166.35p, outperforming the benchmark FTSE 100 index which closed in negative territory. The group’s shares have lost more than 13 percent of their value over the past year, as compared with an over eight-percent rise in the Footsie.
Shore Capital reiterated its ‘hold’ rating on Tesco yesterday, without specifying a price target on the shares.
“We note with interest, market share date from the Republic of Ireland from the leading analytics company Kantar that reports a quite buoyant grocery market, certainly when compared to the drudgery and pressure of the market in the UK,” the broker’s analyst Clive Black said, as quoted by Citywire, referring to the latest Kantar Worldpanel data which showed that grocery sales in Ireland had increased by 3.5 percent in the 12 weeks ending August 14. Tesco’s market share in the country, however, dipped to 21.8 percent during the reported period.
Shore Capital’s Black commented that the UK supermarket was “underperforming [the] buoyant Irish grocery market” and it was a lesson for those in the UK to learn.
“What is happening in Ireland is perhaps a salutary lesson to the majors in the UK on the need not to deflect from the path of remaining focused upon the shopper and the dynamics of price in the market,” he pointed out, adding that Tesco’s “leverage remained fulsome for now, as we have considerably outlined for some time, holding us back from being more positive on the group’s shares”.
At home, the latest Kantar data recently showed that the flow of customers leaving the FTSE 100 grocer had slowed down in recent weeks.
As of 08:00 BST, Thursday, 01 September, Tesco PLC share price is 166.03p.