Financial Trading Blog
Stock of the day 08/04/2016 – Tesco PLC
Whilst the entirety of 2015 was ugly for Tesco things really turned sour from mid-October onwards, the company plunging from £2.01 to £1.49 by the year’s close. The stock continued to go south as the New Year got underway, hitting £1.37 (a price not seen in over a decade and a half) by the end of the first week of trading.
Yet things quickly turned around for Tesco. In the middle of January the company revealed its Q3 and Christmas update, a strong 1.3% rise in like-for-like sales over the holiday period countering the 0.5% fall seen in total sales for the quarter. Despite the arguably mixed nature of the report investors firmly focused on the Christmas cheer, sending Tesco back to £1.70 for the first time since the end of November.
(Source: IT-Finance.com 08/04/2016)
A wobble in the second half of January then pushed the stock back below £1.60, only for the broader market recovery to lift Tesco to £1.80 towards the middle of February. There was a bit of a panic as the month of love came to a close, the announcement that Morrisons would be partnering with Amazon’s Pantry service sending shivers of fear throughout the sector. Yet Tesco was soon back on track, touching £2 for the first time in 5 months towards the end of March. The stock sits at a current trading price of £1.91 (IT-Finance.com, 08/04/2016).
In terms of its earnings release next week, analysts are expecting Tesco to post a 0.8% increase in like-for-like UK sales for the fourth quarter alongside a 1.3% rise for the group as a whole. For the full year, however, total sales are expecting to drop 3% to £55.1 billion, with operating profit of around £920 million to £940 million, roughly the same as for 2014/15.
Tesco PLC has a consensus rating of ‘Hold’ with an average target price of £1.98.
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