Warren Buffett Raises Stake in Tesco

Tesco Plc.,(LSE: TSCO)- Britain’s largest retailer, rose the most in a month in London trading after Warren Buffett’s Berkshire Hathaway Inc. disclosed an increased stake. Also, JP Morgan raised its recommendation to neutral from hold.

Tesco (LSE: TSCO) rose 13.4 pence, or 3.2 percent, to 433.1 pence as of 4 p.m. local time. Berkshire said in a Feb. 27 statement that its shareholding rose 3.1 percent to 234.2 million shares, giving Berkshire, a 3 percent stake.

JP Morgan analysts raised their Tesco rating to neutral from underweight today, citing improving domestic and international sales along with “better prospects” for cash flow. The brokerage increased its price estimate to 450 pence.

Today’s share gain is “a combined factor of having a big name like Buffett behind the stock and analyst upgrades,” James Monro, an analyst at Standard & Poor’s in London, said by phone. He has a buy on Tesco.

“For the shares to outperform we believe the company would need to outperform its peers again in the U.K., improve its capital turnover ratios internationally and prove it can boost free cash flow generation without impacting growth,” said JP Morgan analysts in a report.