Seymour Pierce has maintained its 'reduce' recommendation for supermarket titan Tesco in spite of headline sales figures coming in ahead of expectations on Thursday.
Like-for-like UK sales excluding petrol and VAT rose 1.8% in the six weeks to January 5th, above the consensus estimated growth range of 0.5-1%.
However, Seymour said that while this is an improving trend from the third quarter - UK LFL excluding petrol and VAT were down 0.6% in the 13 weeks to November 24th - "it is a poor return when one takes into account that Tesco has invested 1% of its margin in FY13 to achieve this."
While Credit Suisse has labelled Sainsbury's third-quarter performance as "robust", the broker decided to take a more cautious view for the supermarket's outlook for 2013/14.
"We are not revising our 2012/13 estimates which, in the context of the tough market and recent negative revisions to UK peers, we consider a very solid result. But, for outer-years, we are now taking a slightly more cautious view. Given both the CEO's view that the current trend of negative volumes has maybe another year to run and Sainsbury's slower Q3 growth, we think it now prudent to cut our 2013/14E LFL assumptions - to +1%, from +2.5%."
Panmure Gordon reiterated its 'hold' rating for High Street giant Marks & Spencer following some weaker-than-expected third-quarter sales.
Panmure said that, overall, the figures are likely to lead to a full-year 1.5-2.0% profit before tax downgrade to £660-665m, compared to the broker's initial estimate of £666.8m. The broker has slashed its target price for the stock from 397p to 379p "to reflect a greater level of risk to forecasts".
Datafeed and UK data supplied by NETbuilder and Interactive Data.
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