Shares in WM Morrison fall 1.3 percent, topping the FTSE 100 fallers list, after Credit Suisse reduces its rating for Britain's No. 4 grocer to "neutral" from "outperform" on valuation grounds, according to traders.
Credit Suisse also cuts its earnings estimates for Morrison by up to 3 percent and lowers its target price to 290 pence from 320 pence.
"After weak H1 12/13 sales, we thought Morrison needed to get back on form. It has not yet," the broker says in a note.
"The loss of form, initially we thought mostly due to weak trading conditions, more competitor coupons, and Netto conversions, has continued. It appears to us that Morrison's marketing, promotions and in-store execution are currently not sharp enough. We still hope this is a temporary loss of form and not a longer-term strategic issue," the bank adds.
Morrison's market implied 5-year compound annual growth rate is minus 3 percent, worse than Sainsbury but faring better than the UK's no.1 retailer Tesco on minus 11.3 percent, according to Thomson Reuters Starmine data.
Credit Suisse says although Morrison does not look high-rated on a 12-month forward price-to-earnings of 9.4 times, which is 37 percent below its historical average, it does not expect it to outperform near-term.
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