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Tesco share price: ShoreCap continues to see grocer as ‘buy’

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Shore Capital continues to see Tesco as a ‘buy,’ arguing that management changes showed that the supermarket giant was serious about its competition and can continue its recovery, Citywire reports. The comments are a boost for the blue-chip grocer, which is expected to lose its spot as Britain’s biggest supermarket following the merger between rivals Sainsbury (LON:SBRY) and Asda.

Tesco’s share price lost ground in the previous session, giving up 1.16 percent to close at 247.50p. The shares underperformed the broader UK market, with the benchmark FTSE 100 index adding 18.28 points to close 0.23 percent higher at 7,877.45. This morning, the shares are 0.53 percent up, as compared with a 0.28-percent fall in the Footsie.

ShoreCap upbeat on Tesco

Shore Capital reiterated its ‘buy’ rating on Tesco yesterday, without specifying a price target on the shares. The move came after the grocer made three internal changes to its senior team with Tony Hoggett returning to the UK in a new role as group chief operating officer to help run the core chain’s stores.

“We believe that the group can consolidate upon its recent recovery, weave Booker into the wider business, stay focused in the face of whatever emerges with respect to Sainsbury’s proposed merger with Asda, and correspondingly deliver strong earnings per share growth, considerable free cashflow and even more robust dividend per share distribution,” the broker’s analyst Clive Black explained, as quoted by Citywire, adding that at the same time, the broker believed that “ongoing deleveraging can bolster the stock rating”.

Other analysts on supermarket

Sanford C. Bernstein, which has an ‘outperform’ rating on Tesco, boosted its price target on the shares from 285p to 290p yesterday. According to MarketBeat, Britain’s biggest grocer currently has a consensus ‘hold’ rating and an average price target of 235.93p.

As of 08:05 BST, Wednesday, 23 May, Tesco PLC share price is 248.79p.

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