Marks & Spencer Group PLC is on a clear path of improvement says UBS, which has upped its price target to 230p and slapped a ‘buy’ recommendation on the retailer.
The reshaping of Marks is just starting says the Swiss bank, with good progress now visible in both Clothing & Home (C&H) and Food.
August’s profit upgrade was likely helped by some pent-up demand in C&H but even so, there was clear evidence of improvement in execution, says UBS, which sees this as just the first of a series of upgrades.
Profits should rise to £396mln this year and £441m for the next two years, increasing EPS to 16.1p/17.8p.
"Stand-alone MKS (ex Ocado Retail) is still inexpensive in the context of this recovery at 8x (times) FY22e P/E on our estimates vs. Food sector at c14x & Fashion c19x."
A strategy update on 7 October could provide greater clarity and help shares continue to outperform, adds UBS, which raised its investment stance from 'neutral' previously.
Shares rose 4.5% to 189.1p.