Marks & Spencer (LON:MKS) shares were given a boost this morning following a very chunky upgrade from heavyweight broker JP Morgan Cazenove.
Analyst Gillian Hilditch revised her recommendation to overweight from underweight, while raising her price target to 460 pence a share from 310 pence.
It was made in response to the company's latest trading update, which underlined Marks' ability to withstand the tough high street conditions.
“It has been evident to us throughout the last year that M&S has been outperforming its main peer Next as well as the market in terms of trading,” Hilditch said in a note to clients.
However, until Q4 this performance was overshadowed by our concerns over the inflationary input cost environment.
“The fourth quarter revealed M&S' proactive pricing strategy as well as its resilient customer and seemed to indicate that the pricing power that has in the past seemed so elusive is in fact now coming through.
“If M&S' outperformance versus the sector continues in the coming first quarter, then that would in our view be positive for sentiment.”
The upgrade represents a major endorsement of strategy under new boss Marc Bolland as JPMC is one of the most influential broker in the Square Mile.
The stock reflected this as it rose 4.7 pence to 400.6 pence.
“Historically M&S shares has attracted a recovery multiple during upward phases of the cycle, with a premium ranging from 10-40 per cent,” Hilditch said.
“When the sector comes back into favour, it may well be sufficient therefore for the shares to simply deliver on estimates to re-rate.
“Bolland’s active recruitment in key strategic areas could also provide some positive newsflow in the second half which would stimulate optimism and in the near-term any M&S/sector newsflow could provide a positive stimulus.”