Here is the prognosis of the price of Tesco shares for the next 12 months!

Food retailers are often popular safe paradises in turbulent economic times like this. Still Tesco's (LSE: TSCO) The price of shares has collapsed during the past week, first due to fear of the potential impact of global commercial wars, and more recently by pointing out that the 'price wars' of the industry are about to intensify.

With 324.4p per share, Tesco's shares were in the last time they dealt with 4.4% lower on Monday (March 17). Now they are at their cheapest level since last summer.

However, city analysts think that Great Britain's largest retailer will shoot value in the next 12 months. So, should you consider opening a participation in the Ftse 100 Will the company capitalize a price recovery?

A 26%rebound?

As with most actions, pricing perspectives for Tesco actions acquire a wide range of ups and downs. On the most pessimistic side, an analyst believes that the business will fall 2.6% of the current levels during the next year, to 316p per share.

At the other end of the scale, a especially bullish corridor believes that the supermarket will increase 35.7% of current levels to 440p.

In general, city analysts are quite optimistic about the direction of the price of Tesco shares between now and March 2026. The average objective price between 15 runners with business grades is 407.2p.

That represents a 25.5% premium at the current price.

Cheap paper

After Monday's fall, Tesco's shares now decrease considerable 14.2% during the past week. This means that they now trade with an assessment well below the average of five years.

The retailer changed hands in a profit price ratio (P/E) from 19 to 20 times on average since March 2020. Today that figure is in about 12.3 times much more modest.

For fans of FTSE actions, such a low assessment can leave the scope of a strong price bounce.

However, it is not a view that I share. I think Tesco shares a lower assessment. I also believe that there is a good possibility that the business continues to fall.

Great competition

As described in the upper part, the price of Tesco shares fell into the signs that the industry competition will increase one or two notches.

On Friday, Asda, the third largest supermarket in the United Kingdom, promised to use her “Quite significant war chest“Investing in prices to relive sales. Price wars are not new in the edible sector, but add additional intensity to a market already squeezed by Aldi and Lidl discount chains.

Supermarkets may choose not to pursue the lowest prices at the expense of income. Or they can join the fight and see that their margins are eliminated.

This is an important concern given the thin of Tesco profits that are already the profit margins of Tesco (4.5% between March and August last year, showed the last finances).

The hard economic climate makes the threat that is raised by discarding even more clear as buyers pursue the value. With the aforementioned German operators committed to long -term expansion, the problem does not disappear in the short term.

The verdict

For these reasons, I am not tempted to buy Tesco shares for my portfolio, even when the runners give it a strong price bounce.

On the positive side, the wholesale and banking divisions of the company provide good opportunities to increase the profits. It also has considerable brand and loyalty power of the client through its ClubCard program.

But in general, I think the business entails too much risk, even at today's overcome prices.