Profitability on track

Research evidence excerpt

Profitability on track

Deutsche Bank Group

Deutsche Numis Research

Rating Company Date

Buy Tesco 19 June 2026

Forecast Change

Europe

United Kingdom

Reuters Bloomberg Exchange Ticker Price at 17 Jun 2026 (GBP) 456.70

TSCO.L TSCO LN LSE TSCO

Price Target (GBP) 525.00

Retail

Retail - Food ADR ISIN 52-week range (GBP) 501.20395.80-

TSCDY US8815753020

Valuation & Risks

Benjamin Yokyong-Zoega

DB View Research Analyst

Tesco remains on track to deliver EBIT towards the upper end of guidance. This was +44-20-754-12338

a noisy 1Q period but, despite the softer start to LFL trading, there was a reassuring

Adam Cochrane

message from management on profit and cash. Strategically, below-market Research Analyst

inflation supported volume outperformance and improving customer satisfaction. +44-20-754-17812

Incremental margin levers are bearing fruit with strong growth in retail media, 15%

Do-Hyun Yoo

insurance policy growth and growing mobile penetration. We view Tesco as a high-

Research Associate

quality multi-year compounder. The full impact of inflation is yet to feed through to

+44-20-754-19487

the UK consumer, but we see Tesco as well-positioned for relative outperformance

given its leading scale and defensive qualities. The stock trades on 15x Cal-26 PE Shwetha Ramachandran

and 6.5% FCF yield. Our unchanged 525p TP implies c.15% upside. Reiterate Buy. Research Associate

A little less, a little later Price/price relative

Tesco inflated materially below the market during the quarter (DBe c.2.7% vs

Worldpanel c.3.7% / ONS c.3.0%). This has translated to volume outpeformance

and improved customer satisfaction. While we expect market inflation to inflect in 400

the coming months, Tesco reiterated its intention to inflate "a little less, and a little

later" compared to the market.