B&M (LON: BME) shares plunged at the start of Tuesday’s session, down around 6% after the stock was double-downgraded to Underweight from Overweight at JPMorgan.

Sharecast also reported that as part of JPMorgan’s downgrade of the European food retail sector, it also lowered Tesco (LON: TSCO) to Neutral from Overweight.

B&M shares are trading around the 532.4p mark at the time of writing. Tesco is down almost 2.5% at 257.3p per share.

According to the Sharecast report, JPMorgan analyst Borja Olcese told investors in a note that they “take a cautious stance on the sector,” reflecting their analysis of grocery pricing deflation prospects as we approach 2024.

The firm believes “current sentiment and valuations make for an unattractive risk-reward” as investors begin to reassess their portfolios into 2024. JPMorgan expects grocers’ profit/loss and cash-flow dynamics to worsen in 2024 compared to 2022-23, “triggering downside risk to consensus.”

The analyst is also said to have noted that deflation is a “real possibility,” not factored into share price forecasts.

By Sam Boughedda