Berenberg Bank has lifted its rating on Wm Morrison Supermarkets (LON:MRW), arguing that the company would benefit from the proposed tie-up between rivals J Sainsbury (LON:SBRY) and Asda, WebFG News reports. The comments came after Citi also lifted its stance on Morrisons this week, flagging benefits from the ‘Sasda’ merger.
Morrisons’ share price has slipped into the red in today’s session, having given up 0.41 percent to 243.90p as of 09:55 GMT. The stock is marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.25 percent lower at 7,159.73 points.
Berenberg Bank upbeat on Morrisons
Berenberg Bank lifted its rating on Morrisons from ‘hold’ to ‘buy’ yesterday. WebFG quoted the analysts as arguing that the tie up between Sainsbury’s and Asda could see all three listed UK food retailers – Tesco, Sainsbury’s and Morrisons – become “very appealing equity investments”.
“We identify Morrisons as the primary beneficiary of store disposals – around 15% EPS accretion – and upgrade the stock to ‘buy’,” the broker elaborated, adding that it believed that the Competition and Markets Authority, which is currently probing the Sainsbury’s-Asda merger, was ‘unlikely’ to block the deal on competition grounds. Berenberg, however, reckons, that it could still insist on the disposal of up to 180 stores, with rivals such as Morrisons poised to snap up.
Latest Kantar Worldpanel data
In a separate development, Kantar Worldpanel disclosed yesterday that sales at Morrisons had climbed 0.4 percent in the 12 weeks to January 27, while its market share slipped 0.2 percentage points to 10.6 percent.
“Morrisons’ recent announcement that it will hire 500 new apprentices for its counters could prove a savvy move: 41% of its customers already shop at the retailer’s Market Street stalls,” Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, commented in a statement.
As of 10:18 GMT, Wednesday, 06 February, Wm. Morrison Supermarkets plc share price is 243.90p.