Marks & Spencer: Analysts Bullish Despite Pullback

Despite a recent pullback in Marks & Spencer's (LON: MKS) stock price, analysts remain bullish on the iconic British retailer's continued turnaround prospects.

Marks & Spencer shares have had a solid last 12 months, up more than 48%. However, this year, MKS has struggled, falling over 9% (down a further 2% Tuesday).

Despite the recent pullback, analysts remain bullish on the company as its turnaround continues to gather pace. Over the past few years, Marks & Spencer has embarked on a transformation strategy aimed at revitalising its clothing and home divisions while strengthening its food business. This strategic shift includes streamlining operations, improving supply chain efficiency, enhancing product offerings, and investing in digital capabilities to better engage with customers.

As a result, analysts are optimistic about the company's long-term prospects. Here's why:

In a recent note to clients, analysts at JPMorgan upgraded Marks & Spencer to Overweight from Neutral, raising the price target to 330p, up from 260p per share (at the time of writing, MKS trades at 254p).

The investment bank explained that it prefers retailers with the lowest expectations, highest share gains, and least demanding valuations. “Despite the already strong recovery in the Marks & Spencer shares, the stock still ticks all three boxes,” JPMorgan stated.

In March, RBC Capital upgraded Marks & Spencer to Outperform from Sector Perform with a new price target of 300p, up from 285p. The bank believes Marks & Spencer shares appear to be pricing no growth, but they believe the company can deliver this with a progressive cash returns policy, “thus broadening its appeal to long-term investors.”

Marks & Spencer was raised to Outperform from Neutral at Exane BNP Paribas at the start of the year, with the bank assigning the stock a 320p price target. Exane BNP believes Marks & Spencer shares offer a multiple expansion opportunity in 2024.