Tesco PLC (LSE:TSCO) shares saw pressure after reporting softer-than-expected sales growth for its third quarter and Christmas period, though analysts at Deutsche Bank and Citi believe the market reaction may be overdone.
Group like-for-like (LFL) sales rose 3.1% in Q3 and 2.4% over the six weeks to early January, both slightly below consensus estimates. In the UK, LFL sales grew by 3.9%, just shy of expectations, while Republic of Ireland sales rose 5%. Booker and Central Europe were weaker, with Booker reporting a 0.9% decline.
Deutsche Bank, in a note, said that although the near-term trading miss was driven by softer volume trends and below-market inflation, Tesco continues to outperform peers on both value and volume. It sees the group as well-positioned going into 2026, having invested in pricing over the key festive period.
Analysts trimmed the American bank's FY27 EPS estimate by 1.5% and lowered its target price to 490p from 500p, but maintained a 'Buy' rating.
Citi said FY26 earnings (EBIT) guidance has been narrowed to the top end of the £2.9–£3.1 billion range, in line with consensus. It expects a slightly negative share price reaction to the update.
Tesco shares are down some 5.3% this week, down to 415.2p.