Tesco TSCO LN is the UK’s largest retailer with a market cap of just over £25.0 billion.

That’s just a fraction of the size of its US rival Walmart WMT US, but don’t be fooled, Tesco is still a category killer in its own right.

Albeit one that has been hamstrung by a combination of Covid, Brexit, and the war in Ukraine, which created a myriad of problems for the grocer, some of which are still ongoing.

Growth has been hard to come by in this climate, however things now look to be changing.

Recovery

Tesco reported interim results on October 3rd sales were up by +4.0%, over the same period in the prior year. Whilst operating profits grew by +15.60% over 2023/24.

The company has also added to its market share picking up another 62 basis points, alongside an 88 basis points on its return on its investment, or ROI.

Tesco increased its dividend by +10.40%, part of an ongoing capital return plan, that includes a £1.0 bln share buyback that’s due to be completed by April 2025.

The change in circumstances at Tesco has been reflected in the broker comment on the stock.

For example JP Morgan double-upgraded Tesco at the end of November, moving from Underweight to Overweight, saying that it saw upside to the 2025/26 outlook from the Supermarket chain. The broker raised it price target to 410p from 270p as it did so.

We could argue that JP Morgan is late to party, because the Tesco stock price has been rallying for two years. During which time it’s added + 62.0%. That rally is still continuing with the stock making fresh 52 week highs on December 4th.

Tesco’s stock price has comfortably outperformed its largest rival, Sainsbury SBRY LN (drawn in pink in the chart above), though it remains way behind Marks and Spencers, which is up +234.0% in the last 24 months.

That comparison may be unfair because M&S has been through a root and branch reform in that time.. However, if Tesco can continue to ring the changes, then, JP Morgan’s 410p price target doesn’t look too demanding at all, in fact it’s just 10.0% away.