Jefferies raises target price on Marks & Spencer

Analysts at Jefferies raised their target price on retailer Marks & Spencer from 115.0p to 125.0p on Monday after market share data confirmed a "strong Q3" for the group.

Jefferies stated recent numbers revealed that Marks & Spencer had delivered a solid third-quarter performance in both its food and GM units.

The broker said next week's trading update from M&S could very well nudge up its full-year expectations, especially if "visibly resilient progress" in food has come with "a more acceptable" gross margin cost than that seen in the first half of 2022.

"Early days but M&S is starting to show encouraging staying power against a volatile backdrop," said Jefferies, which reiterated its 'hold' rating on the stock.

However, Jefferies did note that historically, M&S had proven itself to be "poorly equipped" to deliver in a tougher UK macro environment, and said its estimates for H2 and the next trading year had drawn "some inspiration" from that parallel.

It also added that M&S was the most financially leveraged out of its "universe of seven UK groups", but, in an absolute context, highlighted that it was not to the extent that it believes the firm's balance sheet may become a concern.

Reporting by Iain Gilbert at Sharecast.com