The euphoria over the festive performances of Britain’s quoted grocers appears to have worn off if the share price reaction to Tesco PLC’s (LON:TSCO) festive update is anything to go by.
Traders appeared to give a shrug of shoulders and utter a collective ‘meh’ as the stock drifted 2.4% after a slightly-better-than-expected festive performance by the food retailer.
It is fair to say the good news had been widely foreshadowed in earlier, positive trading statements from J Sainsbury (LON:SBRY) and Wm Morrison Supermarkets (LON:MRW).
But what did the brokers make of the recovery being enacted by ‘Drastic’ Dave Lewis and his Tesco team?
Of the 15 analysts logged by the Broker Forecasts site as following Tesco, only four are in the ‘buy’ camp.
Six reckon the stock is fully valued after a run up of more than 30% in the last year – while the remainder have ‘sell’ recommendations.
The consensus price target - up from 181p six months ago – is currently 193p. That’s 10p lower than the current share price.
Early commentary, meanwhile, was at a premium with just Shore Capital poking its head above to parapet to repeat its ‘hold’ recommendation.
“From an investment thesis perspective, we like the self-improvement taking place at Tesco with the management delivering higher quality and more sustainable earnings, something that is again welcome from a sector perspective to our minds,” said Shore’s veteran analyst Clive Black.
“Whilst this is so, Tesco stock still has fulsome recovery earnings multiples, the equity does not yet yield a dividend and on a pension and lease adjusted basis the solvency ratios are still high in an absolute and relative context.
“Accordingly, we see this as a good statement, albeit perhaps not good enough for the ‘uber’ bulls.”