Tesco share price: Jefferies upbeat on grocer amid Sainsbury’s-Asda deal issues

Jefferies continues to see Tesco (LON:TSCO) as a ‘buy,’ arguing that the case for investing in the grocer remains unchanged following the Competition and Markets Authority’s (CMA) provisional findings into the proposed merger between Sainsbury’s (LON:SBRY) and Asda. The watchdog published its provisional findings into the tie-up earlier this week, noting that it was likely to be difficult for the companies to address its concerns.

Tesco’s share price has fallen into the red in London in today’s session, having given up 1.55 percent to 222.60p as of 14:44 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.37 percent higher at 7,194.07 points. The grocer’s shares have added just under eight percent to their value over the past year, as compared with a near one-percent dip in the Footsie.

Jefferies still bullish on Tesco

Jefferies reaffirmed Tesco as a ‘buy’ this week, following the CMA’s provisional findings for the Sainsbury’s-Asda merger. Sharecast quoted the analysts as commenting that Britain’s biggest supermarket was ‘sitting pretty’ ahead of the watchdog’s verdict on the merger on April 30.

The broker reckons that  a scenario of the merger being allowed to go ahead with minimal remedies ‘can pretty much be ruled out,’ leaving investors to look forward to Tesco’s 10 April final results without distraction.

Jefferies expects Britain’s biggest grocer to “confirm an ongoing UK LFL strength, a nice shift in group margins […] and a clearly improving FC profile”.

Other analysts on supermarket

The 16 analysts offering 12-month price targets for Tesco for the Financial Times have a median target of 270.00p on the shares, with a high estimate of 305.00p and a low estimate of 200.00p. As of February 18, the consensus forecast amongst 22 polled investment analysts covering the blue-chip grocer has it that the company will outperform the market. 

As of 15:10 GMT, Friday, 22 February, Tesco PLC share price is 222.60p.