Is the Tesco share price worth 273p per share?

Analysts remain upbeat about Tesco’s share price trajectory, with the average target over the last three months coming in at 273p per share – implying a potential upside for the stock of 25.2%.

Despite analysts optimism the British supermarket chain has its work cut out for it, especially if it wishes to see its share price hit those levels, with the company still struggling to cope with the challenges posed by the Covid-19 pandemic.

However, the grocer has shown impressive resilience in the face of major headwinds, with the company recording an impressive set of first quarter (Q1) results considering the difficult trading environment.

Tesco is trading at 218p per share at the time of publication, with the stock down 14% year-to-date.

Tesco sees strong Q1 sales

Tesco recorded an impressive set of Q1 results last week, with the British supermarket chain benefitting from shoppers shifting towards online sales amid the Covid-19 lockdown measures during the first half of 2020.

In fact, total quarterly sales increased by 8% to £13.4 billion compared with the same period a year prior, with like-for-like sales growth of 7.9% and revenues rising across all geographies.

Sadly, the increase in sales was offset by the increased cost of doing business amid the coronavirus pandemic, with the British supermarket chain having to hire an additional 47,000 staff members to handle the increase in demand due to the viral outbreak.

Tesco shareholders vote down multi-million payday for CEO

Last month, more than two-thirds of Tesco’s shareholders voted to oppose a £6.4 million bonus package for departing CEO Dave Lewis at the company’s annual general meeting (AGM).

Shareholders at the British supermarket chain expressed their discontent at the inflation of Lewis’s performance share plan (PSP) bonus scheme which grew from £800,000 to £2.4 million after Tesco opted to remove Ocado from a group of companies against which its own performance was measured.

Tesco argued that Ocado was more a technology platform which licensed its services to larger grocers rather that an outright retailer which served to dramatically improve Lewis’s performance relative to sector peers and provided the basis for his inflated bonus package that was subsequently rejected by shareholders.

‘Following recent engagement on our remuneration report with a number of our larger shareholders, we have been reassured that the majority agree that the overall outcome of the 2017 PSP award is proportionate given the outstanding turnaround delivered by management,’ Tesco said in a statement.

‘We recognise, however, that a significant number of shareholders had concerns with the principle of the committee's adjustment to the ... comparator group,’ the company added.

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1. Create an IG trading account or log in to your existing account
2. Enter ‘Tesco’ in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade