(News Bulletin 247) – The bank went from “neutral” to “underweight” on the distribution group this Wednesday.

Carrefour action is hardly positive this Wednesday. The title of the distribution group dropped 3.8% around 11:50 a.m. and showed the biggest drop in the CAC 40, and by quite a distance.

The stock is penalized by a change in recommendation from JPMorgan which went from “neutral” to “underweight” on the value, equivalent to “sell” in the terminology of the American bank. It also lowered its price target to 15 euros compared to 19 euros previously.

Although Carrefour shares have experienced ups and downs, they have increased by 7% since mid-February. An increase sufficient for JPMorgan to judge, in a sectoral note, that it is “opportune” to downgrade the value.

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A strategy that leads to losses of market share

The American bank is concerned about the decline in market shares of the company headed by Alexandre Bompard. Between February 2022 and February 2024, Carrefour’s market share in France fell by 50 basis points, or 0.5 percentage points, while Leclerc gained between 70 and 80 basis points, according to Kantar data cited by the establishment.

JPMorgan believes that its new opinion is “more consistent” with the “deterioration of the fundamentals” of the company. Carrefour’s “margin maximization strategy” resulted in “severe losses of market share and a growing relative gap in favor of independent (distributors)”, she writes. Which, according to the bank, suggests that the group’s margin expectations could be overhauled.

JPMorgan explains that this trend should become “more evident” during the publication of Carrefour’s half-year results, scheduled for July 24.

Tesco and Sainsbury no better off

Small consolation for Carrefour: JPMorgan is also “underweight” on the British Sainsbury, Tesco, B&M as well as the Belgian-Dutch Ahold Delhaize. On the other hand, it is “overweight” on the Portuguese Jeronimo Martins and the Belgian Colruyt.

For its part, Morgan Stanley had, at the end of April, abandoned its advice to “overweight” on Carrefour and return to “online weighting”. “The competitive environment in France and Carrefour’s competitive positioning have deteriorated beyond (its) initial expectations,” the bank indicated.

“First quarter market share fell 60 basis points (0.6 percentage points) year-on-year and we expect Carrefour to further narrow its price gap versus Leclerc, with heavy investments to come,” she added.