Our valuation is driven by a c.15x PE target multiple, consistent with the long-run Tesco multiple, applied to CY26e, leading to a target price of 460p.

We believe that our TSCO investment thesis and target price are subject to various industry and company risks, specifically:
 
(1) Price actions of competitors, including price investment from Asda as part of its turnaround plan, which could result in market share losses for TSCO; (2) Further store expansion from the discounters which could result in increased competition and market share losses for TSCO; (3) UK macro factors resulting in a pressured consumer environment could impact volume/mix sales in the grocery business and catering sales within the Booker business; (4) Increased opex headwinds from an acceleration in wage inflation and higher-than-expected business rates resulting in incremental EBIT margin pressure; (5) and, Geopolitical and FX risk relating to its international operations.
 
If the impact from any of these factors proves more negative than we anticipate, the stock will likely have difficulty achieving our financial and price targets.