(Sharecast News) - Analysts at Berenberg hiked their target price on retailer Marks & Spencer from 160.0p to 180.0p on Friday, citing reopening recovery.
Berenberg stated that Marks & Spencer, which reports its full-year results on 26 May, will likely reveal in its earnings the progress it has made to address weaknesses - and that it should emerge from the Covid-19 pandemic "a stronger business".
While the analysts acknowledged that Covid-19 restrictions will have "dragged on performance," in M&S's clothing and home division, e-commerce efforts accelerated, while in its food wing, they stated Ocado tie-up benefits remained "underappreciated". It also noted M&S Food should benefit from re-openings due to its "food-to-go" exposure.
"With peers experiencing positive trends since reopening, this provides confidence in M&S' performance as Covid-19 restrictions ease," said Berenberg, which also reiterated its 'buy' rating on the stock.
The German bank also pointed out that M&S shares still trade roughly 15% below their pre-pandemic levels, despite operational improvements to the business in the last 12 months.
"We value the 50% stake in the Ocado JV at 60.0p per share, which leaves the remainder of the business at just 7.8x CY22 EPS. We think that is too cheap, and expect better sales momentum in both M&S's Food and C&H divisions in the months ahead to be a catalyst for further rerating. Our price target would still only leave it trading at a 25% discount to UK clothing peers," concluded Berenberg.