Morrisons share price dips as Berenberg points to ‘limited opportunities’

on Oct 3, 2017
Updated: Mar 11, 2020

Shares in Wm Morrison Supermarkets (LON:MRW) have fallen into the red in today’s session, underperforming the broader UK market, as analysts at Berenberg initiated coverage of Britain’s fourth-biggest grocer with a ‘sell’ rating. The broker has pointed to limited opportunities at the blue-chip company.

As of 10:27 BST, Morrisons’ share price had given up 0.76 percent to 234.00p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.07 percent higher at 7,444.40 points. The group’s shares have added more than six percent to their value over the past year, and are up by about one percent in the year-to-date.

Berenberg initiated coverage of Morrisons with a ‘sell’ rating today, arguing that after two years of stellar execution since David Potts took over as chief executive, the incremental self-help and catch-up opportunities were now ‘more limited’ for the blue-chip grocer.

The broker further sees “significant cyclical and structural pressures mounting” from rivalry with German discounters Aldi and Lidl’s store expansion and the looming presence of Amazon.

“With Morrison trading at a premium to UK and global peers, slowdown in LFL momentum could drive a de-rating,” the bank said, as quoted by Sharecast. “As discounters grow, winners and losers will not be determined by geographical, but by customer and proposition overlap.”

The comments come after Barclays recently reiterated its bearish stance on Morrisons, pointing to potentially worrying signs in the group’s results.

The 16 analysts offering 12-month price targets for Morrisons for the Financial Times have a median target of 237.50p on the shares, with a high estimate of 275.00p and a low estimate of 170.00p. As of September 29, the consensus forecast amongst 20 polled investment analysts covering the blue-chip grocer advises investors to hold their position in the company. 

As of 10:55 BST, Tuesday, 03 October, Wm. Morrison Supermarkets plc share price is 233.70p.