Broker snap: Tesco to underperform from here, says Matrix

14th Jun 2011 09:45

Matrix has kept its 'reduce' rating on supermarket titan Tesco, saying that it expects the shares to underperform, given that the first quarter figures missed estimates.The broker highlights that results from the UK and International were a touch light, and while Tesco claims to be outperforming the industry, "that is pretty marginal, and only refers to the last month of Kantar data," said analyst Tom Gadsby.He says that non-food is a big underlying drag - down 5% on a like-for-like basis - given that it accounts for around a fifth of the company's UK sales."The shares have performed in line with the sector and the market in the past month, and outperformed both over the past three, which does not suggest that a weakish Q1 [first quarter] is priced in, so we would expect the shares to underperform from here," said Gadsby.The target price is left at 370p.---BC