Citi upgrades Marks & Spencer to 'buy', sees attractive entry point

(Sharecast News) - Citi upgraded Marks & Spencer on Monday to 'buy' from 'neutral' and lifted the price target to 440p from 380p as it said structural tailwinds are underappreciated. "With the shares 18% below pre-Cyber levels, we see an attractive entry point for a business with good underlying momentum," it said.

Citi said that in Fashion, app and survey data suggest M&S is gaining share with younger customers. The bank said its proprietary model implies this can add around 1.5 percentage points to its like-for-like sales per year.

In Food, meanwhile, Citi said its modelling suggests a larger mix of 'bigger baskets' is driving share gains as M&S benefits from trade down from restaurants.

"These tailwinds leave M&S well placed to outperform amid any UK macro uncertainty, and should add circa 4-5pp to LFLs per annum," it said.

"Looking beyond Cyber, we believe FX gross margin tailwinds and modest operating leverage will drive margin expansion to exceed M&S's CMD targets."

The bank said its new estimates are 7%/13% above Visible Alpha consensus for FY27e/FY28e adjusted pre-tax profit.

At 0850 BST, the shares were 2% higher at 349p.