(Bloomberg) -- Marks & Spencer Group Plc’s soaring shares are set to hit highs not seen in almost nine years as the UK retailer wins more customers for its food and clothing, according to analysts at UBS Group AG.
Yashraj Rajani and Sreedhar Mahamkali of UBS set a 12-month price target for M&S shares of 435 pence, the highest among 18 analysts tracked by Bloomberg who cover the company. It’s a level the stock hasn’t traded at since December 2015.
“We believe that the exceptional FY 2024 performance is just the start of a multi-year market outperformance story for M&S,” they wrote in a note to clients, initiating coverage with a buy rating.
M&S stock has already rallied about 250% over the past two years. Only jet-engine manufacturer Rolls-Royce Holdings Plc and weight-loss drug-maker Zealand Pharma A/S have outpaced those gains across the entire Stoxx Europe 600 index.
The retailer has embarked on a turnaround program that’s continuing under Stuart B Machin, who became sole chief executive officer in July. UBS said its survey data shows improvement in quality and value for money in the food business, while in clothing “M&S continues to get fashion trends right.”
M&S shares rose as much as 2.1% to 377.2 pence apiece on Monday, leaving the stock priced at 13.7 times earnings expected a year from now. That’s a discount to the 16.7 times ratio for the Stoxx 600 Retail Index.
The valuation “does not reflect a vastly superior business versus history,” the UBS analysts said.
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