JP Morgan downgrades B&M and Tesco on deflation risks
JP Morgan has cut its performance rating for UK-listed stocks B&M and Tesco as part of its downgrade of the whole European food retail sector.
Source: Sharecast
"We take a cautious stance on the sector, reflecting our analysis of grocery pricing deflation prospects as we approach 2024," said analyst Borja Olcese.
"We think current sentiment and valuations make for an unattractive risk reward as investors start to reassess portfolios into 2024, when we expect grocers’ profit/loss and cash-flow dynamics to worsen vs 22-23, triggering downside risk to consensus."
Olcese said deflation is a "real possibility" and one that it not fully factored into retailers' forecasts of their share prices.
As such, the bank has downgraded stocks in its coverage it thinks are the most exposed, two of which are B&M and Tesco. B&M has been hit with a double-downgrade from 'overweight' to 'underweight'; Tesco has been cut from 'overweight' to 'neutral'.
Whether you're looking for a Share Dealing Account, Stocks and Shares ISA or a Self-Invested Personal Pension (SIPP), we've got an account to suit your needs.
Bank of Scotland is not responsible for the content and accuracy of the Markets News articles. We may not share the views of the author. Understand the risks, please remember the value of your investment can go down as well as up and you may not get back the full amount you invest. We don't provide advice so if you are in any doubt about buying and selling shares or making your own investment decisions we recommend you seek advice from a suitably qualified Financial Advisor. Past performance is not a guide to future performance.
Important legal information
Bank of Scotland Share Dealing Service is operated by Halifax Share Dealing Limited. Halifax Share Dealing Limited. Registered in England and Wales No. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN under number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.
The information contained within this website is provided by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd unless otherwise stated. The information is not intended to be advice or a recommendation to buy, sell or hold any of the shares, companies or investment vehicles mentioned, nor is it information meant to be a research recommendation. This is a solution powered by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd incorporating their prices, data news, charts, fundamentals and investor tools on this site. Terms and conditions apply. Prices and trades are provided by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd and are delayed by at least 15 minutes.
Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.
