City Analysts are Bullish on Tesco Share Price – Should You?

The Tesco share price will be in focus on Wednesday after the latest strong UK inflation data. The stock is trading at 236p, which is about 7% above the lowest level this month. Other retail shares to watch will be Sainsbury’s, Morrison’s, and Ocado.

Tesco news. Tesco has bounced back recently as private equity companies have become interested in UK retailers. Recently, some funds like Apollo, CDR, and Fortress have expressed their interest in Morrison’s, the fourth biggest UK retailer. This follows another buyout of Asda by a TDR Capital and Issah brothers. Therefore, this buyout frenzy has boosted retailers, including Tesco. Many analysts believe that Tesco will not be acquired because of its large size.

Tesco share price will be in focus after the relatively strong UK inflation data. According to the Office of National Statistics, the headline CPI rose from 2.1% in May to 2.5% in June. Similarly, core CPI that exclude food and energy products, rose from 2.0% to 2.3%. The two were substantially above the estimated increase of 2.2% and 2.0%. Notably, the PPI also increased from 3.3% to 3.9%. These numbers are notable because Tesco is the biggest retailer in the UK.

Meanwhile, analysts expect that the Tesco share price will bounce back. Indeed, those at Shore Capital, Berenberg, Barclays, and Morgan Stanley are all bullish on the stock. They expect it to rise to more than 270p, which is substantial considering that it is trading at 236p. Further, a DCF valuation shows that the stock is 39.2% undervalued.

The biggest challenge for Tesco is on how to navigate the post-Covid economy since the overall spending is expected to slow down.

Tesco share price forecast

The four-hour chart shows that the TSCO share price has been relatively volatile recently. The stock has been in a channel whose support and resistance levels are at 222p and 234p. This week, the stock moved above this resistance. It is also slightly below the 61.8% Fibonacci retracement level. It is being supported by the 25-day and 50-day moving averages. Therefore, the stock could keep rising as bulls target the 78.6% retracement at 243p. A drop below233p will invalidate this prediction.

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TSCO shares chart

Tesco share price

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