Tesco PLC (LSE:TSCO) is expected to report “another impressive year” of trading after analysts predicted underlying profits would come in ahead of guidance.
Jefferies reckons Tesco will report earnings of £2.76 billion, beating out company guidance of £2.75 billion and representing a 10.6% jump year-on-year.
Revenues are expected to rise by 5.5% to £69.4 billion, leading to Jefferies estimating earnings per share will rise to 24.03p from 21.85p.
Analysts at the US bank believe Tesco has proven over the last few months its strength in delivering market share gains, while debt-laden grocers like Morrisons and Asda continue to “see stuttering momentum”.
Jefferies said: “The fundamental case for Tesco remains unchanged. The group's spirit of commercial innovation has resonated strongly in recent years.
“In the mid-term, the self-evidently superior potential for media monetisation provides another driver for margin support.
“With this in mind, we would not be surprised if the upcoming finals were to refocus investors' minds on TSCO's ability to continue to drive stronger share dynamics.”
Jefferies rates Tesco a buy and targets a 350p share price, representing around a 27% premium to the current market value.
Full-year results are due April 10.