Stock of the Week: Morrisons

Newly demoted from the FTSE 100, Morrisons has been playing catch-up with the online grocery sales boom, but will shoppers go back to their old habits when lockdown ends?

James Gard 5 March, 2021 | 10:58AM

Stock of the Week

As well as the Budget, the FTSE 100 reshuffle has been on our radar this week. One of the contenders for the drop, supermarket WM Morrison (MRW), has been voted stock of the week by Morningstar Twitter followers, just beating promotion-hopeful Electrocomponents (ECM). FTSE Russell confirmed after the market close on Wednesday that Morrisons and water company Pennon (PNN) will drop down to the FTSE 250 on March 19, and Renishaw (RSW) and Weir (WEIR) are promoted to the FTSE 100.

Morrisons’ demotion comes after a period of share price weakness since the start of 2021 as the coronavirus sales boost starts to fade for supermarkets. But the firm has fallen out of the blue-chip index before, only to reclaim its place at the top table. Over the past year, the share price has been volatile for a defensive income stock; the 2020 lockdown helped shares move towards 200p and the second lockdown provided another boost, but they’ve since faded as the Government laid out plans for the end of restrictions. Still, Morningstar analyst Ioannis Pontikis thinks the shares are trading below their fair value of 197p at their current price of around 170p.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for Morningstar.co.uk

 

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