This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Technical Observations – For
Technical Observations – Against
Shares in a double bullish breakout: above May highs and above falling highs resistance-turned-support dating back to 2012. Morrison’s maintained its grocery market share in the latest Kantar survey (24 July), while rivals Tesco and Sainsbury lost market share.
Supermarket continued to perform strongest compared to main rivals during the World Cup sales period according to Deutsche Bank (27 June). Credit research agency CreditSights (24 July) calls Morrison’s bonds the top performers in the investment-grade sector among UK retailers, based on company’s flexibility to reduce FX headwinds.
Risks to Morrison’s include Brexit-induced disruptions to its supply chain as well as a stronger EUR impacting imported goods; poor wage growth and employment data, as well as general weakness in the UK retail sector; poor upcoming results could also provide a negative push to the share price.
Broker consensus is neutral, with 18% of brokers saying “Buy”, 53% advocating a hold strategy and 30% saying “Sell”. The recent bullish breakout as well as the supermarket’s improved position against retail rivals could induce Neutral brokers to upgrade their recommendations and update their medium-term target price, which sits at 235p, below current share price.
Next Event: Interim Results, 13 Sep
Latest Broker 12-Month Consensus: 18% Buy, 53% Hold, 30% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
| Share | 1wk | 1m | 3m | 6m | 1yr | 2yr | 3yr | 4yr | 5yr |
| Perf % | 2.5 | 4.9 | 9.3 | 15.6 | 7.3 | 40.2 | 44.5 | 53.3 | -8.6 |
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Prepared by Michael van Dulken, Head of Research