BofA Says Tesco's Execution, Expanding Ecosystem Drove Fiscal H1 Beat

04:35 AM EDT, 10/13/2026 (MT Newswires) -- BofA Global Research viewed Tesco's (TSCO.L) operational execution and growth within its broader ecosystem as drivers for the supermarket group's fiscal first-half beat. "Tesco's H1 results and our subsequent CFO meeting strengthen our conviction in the execution story. Adjusted operating profit reached GBP1,783m, up 6.3% at constant currencies and 4.9% ahead of our forecast, despite softer Q2 UK LFL sales. Management stressed that this was not achieved through underinvestment. Tesco continued to invest in price, stores, service, online capacity and new products. The beat instead reflected Save to Invest, favourable mix and growing contributions from newer income streams," analysts said Monday. The research firm said Tesco delivered "softer sales but stronger, higher-quality earnings," with first-half group like-for-like sales up 1%, adding that the "main surprise" came from margin expansion instead of top-line growth. For the 26 weeks ended Aug. 29, revenue came in at 37.35 billion pounds, up from 36.04 billion pounds previously, BofA also viewed Tesco's guidance revision as "deliberately conservative" after the group raised the bottom end of its fiscal 2027 adjusted EBIT target to 3.15 billion pounds sterling while leaving the 3.30 billion-pound top end unchanged. Rather than indicating slowing momentum, analysts believe management kept the upper limit to maintain flexibility ahead of Christmas, the Autumn Budget, and ongoing retail competition. Against this backdrop, the research firm raised its fiscal 2027 to 2029 adjusted EBIT, adjusted net income and adjusted diluted EPS projections. BofA also lifted its price objective to 5.70 pounds from 5.40 pounds and reiterated its buy rating on the stock, noting the company's risk-reward profile "remains skewed positively."