Tesco is a core liquid holding in a global/large market capitalisation consumer portfolio with storm clouds ahead, according to Clive Black at Shore Capital.
The grocer is executing its strategy well, says Black, with store operations competitive and market share gains in the core UK business.
“After speaking with management, we expect a near 50:50 profit split in FY23 with a good first half delivery.”
Uncertainty abounds said Black but he retains a first-half profit expectation of £948mln (Retail EBIT of £1.19bn) with £1.98bn profits forecast for the full year.
“FCF cash flow (yield is 7.4%) is expected to be good (up to £1.8bn) supporting the ongoing buyback and a handsome income yield (c4%).”
Shares were unchanged at 270.7p