Tesco PLC (LSE:TSCO) shares had been on the slide in the run-up to its final results on Thursday 10 April, though have picked up strongly after sinking to a seven-month low last month.
On Thursday, while others were sinking under the weight of US tariff worries, shares in the UK's biggest supermarket were up over 4%.
They had previously fallen around 14% over a just a handful of days last month, when Asda revealed that its turnaround plans had been going well and that it planned a "significant programme of strategic price investment" in 2025 under a new heavyweight boss.
Ahead of Tesco results, analysts at RBC Capital Markets said the Asda-sparked sell-off was a buying opportunity, arguing that concerns over a potential price war sparked by Asda’s aggressive discounting may be overblown.
While Asda has launched deep price cuts in a bid to regain lost market share, RBC analysts said they believe Tesco and Sainsbury’s have the scale, loyalty schemes, and supplier relationships to defend their positions without resorting to a damaging margin squeeze.
UBS analysts echoed that sentiment, noting that Asda’s market share has been in steady decline for years, falling to 12.6% from 15.5% in 2019, according to Kantar data.
Both RBC and UBS acknowledge that Tesco and Sainsbury’s will need to make some pricing adjustments to stay competitive, but they believe the financial impact will be manageable.
UBS said Tesco should have had a strong final quarter, putting the focus on guidance for 2025, which is likely to be "prudent", given debates around /wage and National Insurance-fuelled cost pressures, pricing and market share.