Is the Tesco share price a buy amid stock market panic?

With supermarkets among the only businesses permitted to stay open during the coronavirus pandemic and consumers stockpiling food during lockdown, Tesco shares have held up better than the broader market.

Tesco shares have tumbled 15% since the start of the Covid-19 outbreak, with the stock performing exceptionally during such challenging times and considering that the FTSE 100 has fall 32% over the same period.

Tesco closed at 216p a share on Tuesday.

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HSBC upgrades Tesco

On Tuesday, analysts from HSBC upgraded Tesco’s investment rating from ‘hold’ to ‘buy’, with the market relatively optimistic about the stock’s performance in 2020 despite the economic impact of the coronavirus pandemic.

In fact, of the 14 analysts offering 12-month price targets for the stock, the median target sits at 287p a share, with a high estimate of 315p.

Based on Tesco trading at 216p a share, the median price represents a potential upside of 32%, with the high estimate implying a 45% rise in value over the course of the year.

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Tesco plans £5 billion special dividend

Earlier this month, Tesco announced that it will divest its Thailand and Malaysian units to That conglomerate CP Group in a deal valued at £8.2 billion, with the supermarket chain planning to return £5 billion to shareholders via a special dividend.

Tesco also said that it plans to use the proceeds from the sale to reduce the amount of debt on its balance sheet though a £2.5 billion pension contribution, eliminating the fund’s deficit and ‘significantly’ reducing the prospect of making further such payments in the future.