After last week's sales drop a number of brokers cut their rating on Tesco, and it appears that process is not over.
Analysts at Bernstein have just issued a downbeat note on the supermarket group, saying it has raised its prices faster than rivals in the last few years and has lost its differentiation. They said:
Tesco is not value, not quality, just everywhere. Tesco is now in an impossible position: it is neither value nor quality and can't compete with either the quality or value retailers.
From being within 1% of Asda's prices, the gap is now 5% to 9%.
Bernstein is also negative about Tesco's troubled forays overseas:
Tesco's copy-paste approach to international expansion has delivered hit and miss results.
Tesco's shares are currently down 0.1p at 333.55p.
Elsewhere Vodafone has slipped 0.3p to 233.15p ahead of a speech later by AT&T chairman and chief executive Randall Stephenson. AT&T has been suggested by the City as a possible bidder for the UK mobile phone group, following Vodafone's sale of its stake in US joint venture Verizon Wireless. Analysts at Oriel Securities said:
AT&T's chief executive moved Vodafone's share price when he spoke at other events this year. Therefore he may do so again today.
Most remain as convinced that AT&T will bid for the Vodafone rump as they were about Verizon bidding to buy Vodafone out of Verizon Wireless. But we believe this is not obvious from all that AT&T's top executives have said this year.
We advise trimming overweight positions in Vodafone because we think AT&T has scope to damage Vodafone's share price significantly.
