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On Monday, BofA Securities resumed coverage on Marks & Spencer Group Plc (MKS:LN) (OTC: OTC:MAKSY), issuing a Buy rating and setting a price target at £4.20. The decision follows Marks & Spencer's latest trading update over the Christmas period, which highlighted the company's sustained outperformance and market share growth in its Food and Clothing & Home divisions.
Analysts at BofA Securities pointed out that while profit margins in both segments have surpassed mid-term goals, there is potential for further enhancement. The group's focus is on reinvesting in refurbishing its store network and enhancing the online presence of its Clothing & Home line. Despite these positive developments, Marks & Spencer's shares have fallen to a price-to-earnings (P/E) ratio of 11 times, aligning with the company's ten-year average and mirroring the broader UK consumer sector.
The BofA Securities team believes the recent decline in Marks & Spencer's stock value is unwarranted. They argue that the company deserves a higher market valuation due to its consistent business performance and the potential for margin growth. The analysts emphasized the company's strategic investments as key drivers for future improvements.
Marks & Spencer's recent trading update has evidently reinforced confidence among BofA Securities analysts in the company's trajectory. The retailer's success in gaining market share during a competitive holiday season has been a notable achievement, especially in the context of an industry facing various challenges.
The new price target of £4.20 set by BofA Securities reflects an optimistic outlook for Marks & Spencer, suggesting that the firm's shares have the potential to climb from their current levels. This reinstatement of coverage with a Buy rating is likely to attract investor attention as the market evaluates Marks & Spencer's prospects in light of BofA Securities' analysis.
In other recent news, Marks and Spencer (LON:MKS) Group Plc has seen a series of positive analyst adjustments. Deutsche Bank (ETR:DBKGn) raised its price target for the company to GBP4.50, maintaining a Buy rating, following signs of sustained growth in its primary sectors. This suggests a continued structural turnaround for the brand. Deutsche Bank also revised its forecast for Marks and Spencer's FY25e profit before tax (PBT) upwards by 6% or GBP50 million to GBP850 million, and increased the FY26e forecast by 5% to GBP900 million.
Similarly, JPMorgan upgraded its price target to GBP4.25, upholding an Overweight rating, based on consistent improvement in the Food, Clothing & Home segments. The firm also raised its FY 25 PBT forecast by 4% to £810 million. UBS initiated coverage on Marks and Spencer with a Buy rating and a price target of GBP4.35, indicating potential for structural outperformance.
HSBC increased its price target to GBP4.25, maintaining a Buy rating, recognizing the successful implementation of the company's 'Reshape for Growth' strategy and the acquisition of Gist in fiscal year 2022. These are the recent developments for Marks and Spencer Group Plc.
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