Berenberg upgrades Marshalls to ‘buy’

Berenberg upgraded Marshalls on Thursday to ‘buy’ from ‘hold’ and lifted the price target to 420p from 320p.

The bank noted that Marshalls has had a pretty "torrid" time since it announced the largest acquisition in its history, Marley, in April 2022.

"End-markets turned against the company and much of its product range proved to be far more discretionary than many investors and analysts had expected. As volumes fell, negative operational gearing kicked in, and the earnings sensitivity was material," it said.

"However, Marshalls also presents arguably one of the more interesting rebuild stories in the sector, particularly in light of the new CEO, Matt Pullen, joining at the start of 2024."

Berenberg said that as with most cyclical stocks, it thinks the Marshalls share price is likely to move quickly at the start of a new cycle before earnings momentum really kicks in.

"So what does the size and shape of the next cycle look like? We run a number of scenarios and conclude that there is interesting upside in the stock on a multi-year view, particularly given the magnitude of weakness over 2022-23."

At 1010 GMT, the shares were up 4% at 291.81p.