Tesco Shares Put on Positive Catalyst Watch Ahead of Earnings

Despite a more than 2% decline on Tuesday, Tesco's (LON:TSCO) shares received a boost on Monday, driven by JP Morgan's decision to place the stock on “Positive Catalyst Watch” ahead of the upcoming earnings report due on October 2nd.

JP Morgan also raised its price target for the stock to 450p from a previous 400p, while maintaining an “Overweight” rating on the shares. This adjustment underlines the analyst's anticipation of stronger-than-expected earnings.

JP Morgan has increased its financial forecasts for Tesco, raising first-half estimates by 17%, fiscal year 2026 estimates by 7%, and estimates for fiscal year 2027 onwards by an average of 4%.

The analyst now projects adjusted earnings per share (EPS) at 30.04p for fiscal 2026 and 34.65p for fiscal 2027. These figures are approximately 10% higher than consensus estimates.

“We have been pretty consistent with our thesis, based on three premises: (i) Rational backdrop, (ii) substantial capital returns, and (iii) an appealing set-up on the stock (earnings & valuation upside risk),” JP Morgan wrote in a note to clients.

The analysts added that they view the arguments as ongoing, reflecting the solid momentum in its near- to medium-term expectations for Tesco.

“In our view, the company is unlikely to raise guidance with the 1H26 print in order to retain flexibility to address potential heightened competition (though all signs so far confirm an unchanged status quo within Asda and discounters),” explained the bank.

However, the analysts believe the company “may narrow the guidance range with this update towards the upper-end, triggering consensus upgrades.”