TSCO stock price news: a bright 2022 ahead?
The latest Tesco share price news shows a strong first-half performance, but how is 2022 shaping up for Britain’s biggest retailer?
There’s been no shortage of Tesco share price news for investors to chew over after an impressive first half. Tesco published its interim results in October 2021, revealing that first-half sales rose by 2.6% and operating profits surged 40.6%. Another upbeat spot of Tesco share news came courtesy of online sales growth of 10.8% on a year-over-year basis.
One challenge for the Tesco share price forecast in 2022 is the growing competition from discount brands such as Aldi. The UK’s biggest supermarket chain tackled this head-on in the first half by matching prices on hundreds of products during the period. Tesco’s Aldi Price Match strategy grew to encompass around 650 products.
The company said:
“We continued to expand our value proposition and customers responded well, with our value perception improving by 170 basis points year-on-year.”
And Tesco chief executive Ken Murphy added:
“I’m really pleased with our progress as we increased customer satisfaction and grew market share, leading to a strong financial performance. With various different challenges currently affecting the industry, the resilience of our supply chain and the depth of our supplier partnerships has once again been shown to be a key asset.”
Here, we’re going to recap the latest Tesco stock news and reveal what analysts are predicting for 2022 and beyond as coronavirus and supply chain challenges continue to dominate the headlines.
Tesco share price news: a challenging climate
As we set out in the Sainsbury’s share price forecast recently, UK supermarkets are facing big challenges in 2022.
Now more than ever, consumers are watching their pennies and are sensitive to price rises in the current economic climate. In November 2021, UK inflation hit a 10-year high at 4.2%, up from the forecast 3.9%. Like other essential retailers, Tesco ramped up safety measures in all of its stores in response to Covid-19 – costing hundreds of millions of pounds. Unfortunately, the emergence of a more transmissible variant has made this a continuing worry.
There are also fears that history could repeat itself, with panic buying and rationing, while manufacturers, shippers and retailers grapple with global supply chain bottlenecks. Labour unrest emerged at half of the company’s distribution centres before Christmas over an impasse in pay negotiations. Brexit could also continue to affect the Tesco share price forecast in 2022, given the UK’s reliance on overseas food suppliers. With food and farming leaders warning that the UK must maintain self-sufficiency in food production at 60% to ensure food security. There could continue to be troubles well into 2022.
Tesco shares: buy or sell?
Tesco stock fell sharply in mid-February 2021, losing 28% in 12 days on the London stock market after shareholders approved a special £5bn ($6.6bn) dividend linked to the retailer’s retreat from Malaysia and Thailand following the sale of its business there to Charoen Pokphand Group. The TSCO share price took until mid-November to gain back 62p in lost value on the FTSE, but by December, it was still almost 8% shy of its February highs. It was trading at 285p at the time of writing, a far cry from the glory days of 2007, when TSCO was trading above 613p.
Nonetheless, analyst firm Hargreaves Lansdown is among those anticipating more good news from Tesco in 2022.
“Supply chains around the world have come under increasing pressure, and that’s one area where Tesco stands above the rest. It has deep roots. Strong, varied supplier and distribution relationships mean shelves have stayed pretty well stocked.”
Competition remains the great variable, according to Hargreaves Lansdown, as the grocer attempts to meet its never-ending challenge and the consumer’s eternal desire for low prices and high quality.
Ultimately, Hargreaves Lansdown believes Tesco is well-placed with strong sales and a position to make gains in the online space.
“The grocery space is rife with competitors all trying to grab market share. The tricky thing to get right is being able to offer low prices to keep Aldi and Lidl at bay while maintaining brand quality. And as companies try to undercut each other on pricing, margins get squeezed.”
Should I buy Tesco shares?
Not content to stand still, Tesco joined the race to create the store of the future. In October, it launched its first checkout-free, pay-by-app Tesco Express GetGo store in Central London (which has been cashless since it opened in 2018). It also spent much of 2021 introducing sustainability initiatives, from increasing its fleet of electric delivery lorries to enhancing its Perfectly Imperfect blemished fruit and vegetable line.
Overall, Tesco share price news shows a resilient business that is weathering the pandemic and supply chain challenges as best as it can.
Trade Tesco PLC – TSCOl stock price
Let’s wrap up with a look at how 2022 is shaping up – and whether analysts regard Tesco stock as a buy or sell.
Financial Times-polled analysts gave Tesco a consensus outperform rating; three said buy, 11 outperform, two hold, two underperform, and none advised selling. The median price forecast, according to 14 analysts surveyed, is 319p, with a high of 345p and a low of 220p. It’s important to note that stock forecasts are frequently wrong, so you should always do your own research, remember that stocks can go down as well as up and never invest more than you can afford.
Things appear to be looking up for Tesco. It’ll be especially interesting to see whether the Covid-19 pandemic results in permanent changes to shopping patterns or whether consumers will revert to their old trends once things return to normal. Given its aggressive investment in online channels, it looks like Tesco is betting on the latter.