Following next week’s half year results, can Morrisons' supermarket sweep continue?
2018 has turned into a pretty fantastic year for Morrisons; however, it wasn’t always that way. Opening at £2.20, the stock got into a bit of trouble following mid-March’s full year reporting, tumbling towards an 18 month low of £2.05 despite unveiling a 17% surge in pre-tax profit.
Yet from that nadir the company bounced back quite aggressively. A positive note from analysts at Bernstein at the end of March helped kick-start the comeback, followed by an upgrade by Berenberg a week later.
The stock then rode out news that Sainsbury's (LON:SBRY) and Asda were merging in late April, with another jump occurring after early-May’s Q1 update and subsequent speculation that Amazon (NASDAQ:AMZN) could at some point buy the supermarket. Morrisons posted a 3.6% rise in like-for-like sales excluding fuel for the 13 weeks to 6th May, with retail and wholesale contributing 1.8% apiece. Total sales, meanwhile, jumped 3.8%, or 2.1% including fuel.
The firm then suffered a brief did in late May, before resuming its climb as summer got underway. Morrisons eventually managed to hit a 57-month high of £2.70 in August, before slipping to a current trading price of £2.63.
In terms of Thursday’s interim results, investors will ideally want to see an improvement on that admittedly already impressive Q1 LFL growth, given that the second quarter covers the dual boosts of a roasting summer heatwave and England’s better than expected showing at the World Cup in Russia.
WM Morrison Supermarkets PLC (LON:MRW) has a consensus rating of ‘Hold’ alongside an average target price of £2.36.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.