(Sharecast News) - Societe Generale upped its stance on shares of Marks & Spencer to 'hold' from 'sell' on Thursday and lifted the price target to 189p from 179p following the retailer's first-half results a day earlier.
The bank said the food performance was better than it expected, with the investment in price beginning to pay off in sales growth. In addition, it argued that execution in the clothing segment is improving, with much stronger availability and a couple of "encouraging indicators".
Finally, SocGen said the drop in the share price over the past year leaves M&S on a more appropriate valuation at 10x price-to-earnings, with the stock now trading below its discounted cash flow valuation.
On Wednesday, M&S said weaker clothing and homeware sales saw interim revenue fall 2% as it posted a 17% decline in pre-tax profit in "challenging conditions".
Clothing and homeware like-for-like sales fell 5%, reflecting "first half share of buy and supply chain issues," it said, while food LFL sales grew 0.9%, driven by volume.
At 1450 GMT, M&S shares were up 6.3% at 193.50p.
Marks & Spencer (MKS)Today 12:26
