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(Sharecast News) - Shore Capital downgraded Tesco on Wednesday to 'hold' from 'buy' and suggested investors pause for breath.
The broker, which cut its price target to 480p from 525p, said Tesco has done all that it could have asked from the business in recent years.
"An outstanding management team has executed retail delivery with excellent consistency and strong capital discipline has driven sustained cash generation, making for attractive total shareholder returns," it said.
"Such a backdrop has been rewarded with an equity rating that we deem to be fair (circa 15x). Whilst so, we see a UK grocery retail scene where summer 2026 volume is quite shallow, cost recovery is not easy, the competitive intensity is a little higher and Tesco is facing into the headwind of multi-year share gains."
As a result, ShoreCap said that while it remains comfortable with guidance, as H1 FY27F comes to an end, it feels it sensible to pause for breath.
At 1408 BST, Tesco shares were down 3.2% at 446.80p.
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