Shares in Tesco (LON:TSCO) have climbed in higher in London in today’s session, as Deutsche Bank maintained its ‘buy’ rating on the stock. The move came after Britain’s biggest grocer updated investors on its full-year performance earlier this month, posting a 28.3-percent rise in pre-tax profit and lifting its payout to shareholders.
As of 13:28 BST, the Tesco share price had added one percent to 252.60p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.41 percent higher at 7,490.33 points. The group’s shares have gained about five percent to their value over the past year, as compared with about a 1.3-percent gain in the Footsie.
Deutsche Bank bullish on Tesco
Deutsche Bank reaffirmed Tesco as a ‘buy’ today, while lifting its price target on the shares from 250.1p to 300p. Proactive Investors quoted the broker as commenting that it sees more upside to the Tesco share price, as “momentum should remain strong, with a better sales dynamic than the other Big 4 in the UK” and further margin improvement.
The analysts reckon that the consensus forecast needs to adjust upward, and raised its own estimates on earnings per share (EPS) for 2020-22 by 11 percent on lower financial costs and tax rates. For the current financial year, Deutsche Bank expects pre-tax profit of £2.24 billion, which, the bank thinks, should drive a 7.8-percent free cash flow yield for the year, versus 5.3 percent on average for peers, enabling a 50-percent dividend increase.
Other analysts on blue-chip grocer
The 13 analysts offering 12-month price targets for Tesco for the Financial Times have a median target of 280.00p on the shares, with a high estimate of 305.00p and a low estimate of 230.00p. As of April 19, the consensus forecast amongst 21 polled investment analysts covering the blue-chip grocer has it that the company will outperform the market.