Big Four supermarket Tesco (LON:TSCO) is one of the biggest risers on the FTSE 100 this morning, gaining over 5 percent after a positive note from Barclays raised its recommendation.
Whilst giving a nod to the difficulties facing the supermarket sector currently, analyst James Anstead said the near future for Tesco looked positive:
“We think recent share price underperformance has left Tesco’s valuation at attractive levels, although we remain conscious of the numerous headwinds facing the UK food retail market.
“Additionally, we tend to think that the upcoming trading statement (14 January) may be less worrisome than the market’s worst fears. Consequently we upgrade our stock rating to overweight (from equal weight), and our price target (reduced to £1.90 from £2.25, based on an average of discounted cash flow and sum of the parts valuations) still gives a 34% upside potential.”
Britain’s supemarkets have been facing difficulties over the last couple of years, with increased competition from budget chains such as Lidl and Aldi causing a spate of disappointing results.
A positive note from Barclays indicates that 2016 may be a more positive year for Tesco, which is currently trading up 4.67 percent at 145.70 (1026GMT). Their next set of results which covers Christmas trading is due for release on the 14th January, and will shed further light on the overall performance of the company.
08/01/2016