The Tesco (LSE:TSCO) share price has outperformed the broader FTSE 100 so far in 2025. It’s up an impressive 21% in the last year, but like most, I’ve already got an eye firmly on what could happen in 2026. As part of assessing how the stock could perform, I looked at analyst ratings, with some interesting results.
Taking note of targets
Four major banks have a 12-month price target of 500p for Tesco shares right now. The research teams at Goldman Sachs, JP Morgan, Barclays and BNP Paribas all have the same forecast for the stock for 2026. For reference, the current share price is 452p. So that would indicate a potential gain of over 10% for the coming period, even with the strong rally this year. The fact that several big players all have the same view is a tick for me, although I have to remember these are still subjective views.
Of the 14 total contributors that I can view, the average target price is 473.7p. This indicates that, overall, analysts expect the Tesco share price to rise next year. However, the lowest contributor has a price of 422p, so it’s clear that not everyone is optimistic about the company for next year.
Adding in my view
Tesco has done well over the past year. According to October data, the company has reclaimed grocery market share. It rose to 28%, a level not seen in almost a decade. Different initiatives are driving the gains, such as matching discounter prices on many items, pushing the popular Clubcard loyalty scheme, and further developing the strong own-brand offering.
I think all of this could help the giant push on next year and beyond. Demand could increase, particularly via the loyalty scheme and cheaper own-brand products, if the UK economy underperforms and shoppers become a lot more value-conscious.
Profitability could also increase next year thanks to Tesco’s ongoing ‘save to invest’ cost-control measures. This should allow it to protect profit margins while hopefully still maintaining high standards. When I consider the price-to-earnings ratio, a rise in profit could act to pull the share price higher. The current ratio is 16.25, below the FTSE 100 average of 18.2. Therefore, if earnings per share jump by 10%, I’d expect the stock also to jump 10%, to maintain the current ratio.
Risk and reward
Despite strong performance, Tesco operates in a highly competitive sector with generally low profit margins. This means that if costs rise more than expected or demand slumps, it can quickly find itself under financial pressure. Or if another discount chain targets similar products to Tesco, shoppers could switch, which again would be bad news.
Despite these risks, I think it’s plausible for the stock to reach 500p over the coming year. As a result, I think it’s one worth considering at the moment.
