Tesco, up today, ready to disappoint tomorrow?

It was a surprise today to see Tesco on the rise.  Fair enough the market was up as often seems to be the case on Tuesday at the moment. A rise of 6p, 1.7% in the share price to a little over 364p might not seem much, but it comes on the eve of an IMS that is expected to disappoint. In fact, judging by what some are saying, Tesco could deliver a terrible set of figures tomorrow, a reminder of its UK profit warning back in January 2012.

Tesco’s first quarter results out Wednesday are likely to disappoint, according to Investec. 

The broker expects like-for-like sales to fall as much as 1.0% in the UK, 2.5% in Asia and 5.0% in Europe. It downgraded the stocks to a ‘sell’ rating and issued a target price of 295p. 

"The UK still lacks momentum and international is going from bad to worse," Investec analyst Dave McCarthy said. 

He said the international side of the business is a growing problem and after 15 years there is no sign of acceptable returns. 

The company’s latest results will come after the retailer last month reported its first annual profit decline in two decades. 

http://www.digitallook.com/news/20941271/Wednesday_preview_Tesco_to_report_first_quarter_results.html?username=&ac=

This analysis, especially on Tesco's international performance is a little unfair. 15 years of no sign of acceptable returns? That's pushing it considering they have been growing fairly strongly in most of their overseas markets for some time. You do wonder if Investec have a short on at the moment when they make silly statements like that.

But why the enthusiasm of the price rise today? Why would anyone be buying today if tomorrow is going to produce a bad result? Could it be that some in the know were selling today, the price being ramped up slightly to draw in as many eve of bad IMS statement mug punters as possible? In other words, the long term buy and hold retail buyers? Perhaps that is being too conspiratorial, but given the expectation of further bad news, the best Tesco shareholders can hope for in the morning is that things aren't as bad as predicted and the market reacts kindly. Chances are if the IMS is bad, Tesco could fall a lot more than the 6p it gained today. Let's see what happens in the morning.