Barclays expects strong H1 from Tesco, raises target price

The bank upped its target price from 320p to 325p, saying it expects Tesco to report strong figures when it reports on 4 October.

"We expect strong results", Barclays said in a research report on Friday, predicting UK like-for-like growth to remain relatively stable at 8.8%, compared with the 9% growth reported in the first quarter. Retail earnings before interest (EBIT) are expected to be up 10.2%.

"We think Tesco may well raise full-year retail EBIT/free cash flow guidance (even with a cautious view of how 2H may evolve)," Barclays said.

Tesco said back in June it expected full-year EBIT to be broadly flat year-on-year and retail free cash flow to be between £1.4bn to £1.8bn.

Barclays has a 'neutral' stance on the wider consumer sector but has kept Tesco as 'overweight'.