Market Report: Tesco pessimist thinks investors are harsh


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One of Tesco’s biggest bears has called the bottom.

Bernstein’s Bruno Monteyne, a former Tesco exec turned hardened sceptic, claimed on Monday that the current price “implies ‘a rights issue is around the corner’ and ‘the business can’t be fixed’”, both of which he disagrees with given the first months of boss Dave Clark’s reign.

Sure, there are risks and it’s a long road, but the Tesco pessimist thinks investors are harsh. Monteyne upgraded Tesco to outperform with a bullish £2.30 target, helping it up 8.45p to 192.9p.

It was a different story for J Sainsbury, the worst performer on the bluechip index, down 6.9p at 254.7p. The fall was sparked by a price cut from Cantor Fitzgerald, which expects the supermarket will announce a divi cut along with Thursday’s update. The gulf between the two retailers was exacerbated by a High Court case on Tesco’s Price Promise that went against Sainsbury’s.

The Footsie enjoyed a positive start, adding 44.01 points to reach 6611.25.

Cairn Energy rocketed 19.1p to 177p on the mid-cap index after announcing the discovery of “high quality” oil offshore Senegal, the second direct hit in the area in as many months.

Trinity Mirror tumbled 10p to 156p after quarterly revenues dropped 5 per cent, with a steep decline in supermarket ad sales.

After Afren’s rally on Friday, it was fellow Kurdistan oil explorers Genel Energy and Gulf Keystone Petroleum’s time to shine. Genel, headed by former BP boss Tony Haywood, jumped 58p to 812p amid speculation it will announce a landmark export deal with Turkey alongside Thursday’s results. Gulf Keystone, which also reports on Thursday, climbed 8p to 83p on similar hopes.

On AIM, investors cheered news that spirit maker Distil has signed new distribution deals. Mitchell & Butlers’ Castle Pubs and wholesaler Booker have begun stocking its RedLeg Rum, while Sainsbury’s, Tesco and Majestic Wine are promoting its Blackwoods Vodka and Gin. Distil was up 0.8p to 1.4p.

The book on Mortgage Advice Bureau’s AIM float closed yesterday, with sources claiming shares will be priced at £1.60.