Tesco Shares: Citi Raises Price Target Following Kantar Data

Citi analysts raised their price target for Tesco (LON: TSCO) following the release of the latest UK Kantar grocery market data.

The investment bank said in a note that it now sees the shares reaching £4.25, up from their previous target of £3.50, and maintains a Buy rating on the stock.

Citi's updated forecasts are based on the expected strong performance of Tesco in its second quarter of 2025, as indicated by the Kantar data.

“[The] continued UK market share gains [are] expected to be reflected in 1H25 results,” said Citi.

Looking ahead to Tesco's interim results on October 3, Citi said the retailer is expected to achieve a like-for-like sales growth of 3.8% in the UK in Q2, accelerating from the 3.4% growth seen in the first quarter.

The analysts attribute Tesco's success to several factors, including low-single-digit UK food inflation and continued market share gains. Furthermore, Citi expects Tesco's ROI (return on investment) to remain strong, with a projected like-for-like growth of 3.5% in the second quarter.

While the Booker and Central Europe segments are expected to see more modest growth, Citi's overall forecast for Tesco's retail EBIT and free cash flow has been increased.

The investment bank now anticipates retail EBIT to reach £2.867 million in fiscal year 2025, surpassing the company's guidance of at least £2.8 billion.

Additionally, retail free cash flow is projected to be £1.508 million, compared to the company's guidance of £1.4 billion to £1.8 billion.

Citi's positive outlook on Tesco is based on the strong performance demonstrated in recent months, supported by favourable market conditions. The increased price target reflects the investment bank's confidence in the retailer's ability to continue delivering solid results.