ANALYST cuts prompted a rush to the exits for investors in retailer Tesco, weighing on the blue-chip
Nomura, Oriel, Cantor and Jefferies were among those brokers yesterday that cut ratings or price targets on Tesco, the world's third-largest retailer, just a day after it flagged price cuts and scaled back its operating margin goal.
That would have pleased the many investors who had borrowed the stock and sold it on, betting on a share price fall, heading into the numbers. Over the last week the number of shares on loan had jumped by a quarter.
"It's a reasonable size number and shows people were anticipating some bad news," said
Demand to sell out of the stock was strong - at twice its three-month daily average - although by the close it had pulled off its lows to trade down 2.8 percent, its biggest daily fall since
"You have to ask why investors need to be in this stock at the moment. I would advise caution on the stock," said
The scale of the weakness in Tesco weighed on the broader European retail sector and caused the Stoxx Europe 600 Retail index to end down 0.8 percent and lag most sectoral peers.
Tesco's heavy weighting within the
"If we test 6,850, then we could be set for higher highs and the next target would be the all-time high of 6,950.60. But if we fail to break through the 6,850 level in the near term, the market would become vulnerable to more profit taking."
Also feeling investors' ire, in spite of plans to issue a special dividend, was broadcaster ITV, down 2.2 percent in volume nearly four times its threemonth average that made it the most traded blue chip.
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