Tesco and Sainsbury are coming under pressure from a resurgent Morrisons, according to an analysis of the grocery sector’s latest numbers by JP Morgan.
Morrisons’ improving shape is driven by better execution and self-help, says the US bank.
Across the sector, the tone is one of more rapid than expected disinflation, which combined with ongoing opex pressures, is resulting in rather cautious overall outlooks.
“We continue to see the best way to play the UK market via overweight MKS whilst we would continue to avoid B&M, Sainsbury’s, and Tesco", the bank said, with all three rated 'underweight' as competition from Morrisons "heats up".
Shares in Tesco and Sainsbury today were up 0.6% at 307.7p and 1.7% at 259.4p respectively on the prospective boost from England’s win yesterday in the Euros.