UBS keeps 'buy' on Tesco with 16.5% return potential, impressed by fast share buyback and strong customer scores.

UBS has reaffirmed its 'buy' rating on Tesco with a 12-month price target of 545p, implying a 16.45% potential return. The broker highlights Tesco's rapid completion of 73% of its £750 million annual share buyback in the first half, the fastest pace since the program began, signaling strong shareholder returns. UBS expects a positive first-half update despite tough comparatives and anticipates earnings at the higher end of management guidance. Tesco leads mainstream grocers in customer perception and price attractiveness, with improved customer visits and spending per visit. The stock trades at about 15 times forward earnings, aligning with its long-term valuation and offering around 12% total shareholder returns.