Update shared on 15 Nov 2025
Analysts have increased their price target for Tesco to £4.50 from £4.00, citing stronger than expected earnings estimates and an improved profit outlook.
Analyst Commentary
Bullish analysts have raised their price targets for Tesco, reflecting increased confidence in the company's outlook. They highlight several positive developments that support the stock's upward momentum.
Bullish Takeaways- Recent earnings estimates were raised significantly, with upgrades to both first half and full year expectations. This suggests momentum is stronger than previously anticipated.
- Forecasts for the next few years are now quoted as "comfortably above guidance," which indicates analysts believe Tesco can outperform its stated targets.
- The company has been placed on "Positive Catalyst Watch." There is an expectation that upcoming earnings could drive further share price gains if results continue to exceed estimates.
- An improved profit outlook supports a higher valuation as confidence in Tesco's ability to deliver growth and margin expansion increases.
- Despite the upgrades, some caution remains regarding the sustainability of elevated earnings growth beyond the near term.
- There are ongoing questions about Tesco's ability to consistently deliver above-guidance performance amid broader retail sector challenges.
- Potential risks include margin pressure from rising costs and intensely competitive market conditions, which could impact longer-term profitability if not managed effectively.
What's in the News
- Pacvue has launched a new partnership with Tesco Media to enhance retail media activation. This partnership will provide brands with advanced reporting, automation, and optimization tools for campaigns on Tesco (Key Developments).
- Solution International has expanded its 'Grow with Peppa' character merchandise range in Tesco stores and online. The initiative aims to drive engagement in the baby feeding category, with products available in up to 510 stores across the UK and Ireland (Key Developments).
- Tesco PLC announced an interim dividend of 4.80 pence per ordinary share for the 26 weeks ending August 23, 2025, maintaining its policy of setting the interim dividend at 35 percent of the prior full year dividend (Key Developments).
Valuation Changes
- Fair Value remains unchanged at £4.70 per share, indicating no adjustment in analysts' fundamental estimate of Tesco's intrinsic worth.
- The discount rate has risen slightly from 7.78 percent to 7.99 percent, reflecting a modest increase in perceived risk or required return for investors.
- Revenue growth projections are virtually unchanged, holding steady at approximately 2.81 percent.
- Net profit margin estimates remain stable at around 2.76 percent, suggesting expectations for Tesco's profitability have not shifted.
- The future P/E has increased marginally from 16.43x to 16.53x, signaling a slightly higher multiple being applied to Tesco's expected earnings.
Disclaimer
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