Tesco's (LON:TSCO) relative trading performance has improved slightly in recent months according to data, says City broker UBS Investment Research.
In a note, analyst Mike Tattershall looked at the food giant's prospects for sales in the first quarter (to June 14) and questions whether there are early signs of improvement in the UK.
It retains a neutral stance on the stock for the next 12 months with a price target of 410 pence (current share price 409 pence).
The data from market researcher Kantar, he said, suggests the firm's relative performance has improved slightly particularly relative to Asda which "appeared to be struggling".
This comes at a time of general economic malaise, he added.
"It is too early to judge whether this will become a sustained trend as a function of initiatives undertaken by the new UK management team, however it is an encouraging feature especially since there are few tangible signs of the underlying macro backdrop improving."
He added: "Using Kantar as a guide suggests ex fuel inc VAT total sales growth in the quarter of 5.1 percent."
The analyst went on to say: "Our price target is set at a 15 percent discount to Tesco’s 10-year average forward PE reflecting a slightly lower prospective growth profile.
"In our view a more marked improvement in (absolute or relative) UK trading will be required to drive a material rerating from the current level."