MARKET REPORT: Hat-trick of City upgrades puts spark back into M&S

Marks and Spencer found itself back in fashion with investors after a hat-trick of upgrades from City brokers.

Amid fresh signs of a recovery at the High Street favourite, BNP Paribas declared ‘management has put the spark back into M&S’.

Its analysts raised the target price to 160p from 140p and upgraded its rating to ‘neutral’ from ‘underperform’.

Upgraded: BNP Paribas's annual 'survey of shoppers' revealed the retailer was the most improved brand both year-on-year and since before Covid struck

Upgraded: BNP Paribas’s annual ‘survey of shoppers’ revealed the retailer was the most improved brand both year-on-year and since before Covid struck

Goldman Sachs and Citigroup analysts also raised target prices and ratings on M&S. M&S shares rose 4.5 per cent, or 6.6p, to 154.7p, taking gains for the year so far to 25 per cent.

The upgrades came as BNP’s annual survey of shoppers revealed the retailer was the most improved brand both year-on-year and since before Covid.

The survey asked 5,000 female shoppers in France, Germany, Spain and the UK about their retail spending habits.

While M&S still lagged behind counterparts such as Next on most metrics, BNP said the results showed its financial improvement has been driven by a ‘genuine resurgence of the brand’. 

It added that the company’s clothing and home division, which makes up more than half of group profits, has ‘strongly improved in the eyes of the consumer’.

It said while the joint venture between M&S and Ocado was currently making a loss, it should become profitable in due course.

Meanwhile, inflation and interest rates were the talk of the City.

Official figures showed UK inflation rose to 10.4 per cent in February – defying expectations of a fall – as food and drink prices rose at the fastest pace for 45 years.

Stock Watch – Anpario

Shares in Anpario fell as it warned of a tough year ahead.

The maker of additives for animal feed said trading this year has been weak so far and was likely to stay challenging amid widespread bird flu.

It followed a difficult 12 months of supply chain issues, rising costs, war in Ukraine and China’s strict Covid curbs.

Profits fell 35 per cent to £3.7million in 2022 while Europe sales slumped by more than a fifth due to the energy crisis and inflated grain prices. 

Shares fell 28.2 per cent, or 88p, to 222.5p

Investors are now betting the Bank of England will press ahead with another interest rate hike today after the Federal Reserve raised US rates by 0.25 percentage points last night.

The FTSE 100 rose 0.4 per cent, or 30.6p, to 7566.8 while the FTSE 250 fell 0.1 per cent, or 21.3p, to 18757.8.

Banking stocks enjoyed another positive session amid renewed hopes that the worst of the crisis which engulfed financial systems this month has passed.

HSBC rose 1.9 per cent, or 10.6p, to 564.6p. Barclays fell 0.3 per cent, or 0.5p, to 142.7p. Standard Chartered rose 1.3 per cent, or 8.4p, to 652p. NatWest fell 1.2 per cent, or 3.2p, to 269.2p.

Superdry sold its intellectual property assets in most of the Asia Pacific region to the South Korean underwear firm Cowell Fashion for around £34million.

As the embattled retailer tries to turn around its fortunes, the deal will see Superdry clothing sold across South Korea and China.

Superdry said it planned to work with Cowell to design products in line with its brand heritage. Shares rose 3.2 per cent, or 3.4p, to 111.4p.

Property landlords sank into the red after Morgan Stanley analysts warned a recession ‘would not be good for the sector’ but could be on the cards following persistent rate hikes and soaring inflation.

The investment bank said recent turmoil in the financial system could lead to ‘significantly lower capital availability’.

Goldman Sachs downgraded British Land to ‘sell’ from ‘neutral’ due to its high exposure to London. 

British Land, which owns the Paddington Central campus and swathes of the City, fell 6 per cent, or 24p, to 375p while Birmingham Bullring owner Hammerson was down 4.5 per cent, or 1.1p, to 23p and Land Securities dropped 3.8 per cent, or 23p, to 590.4p.

Car dealer Pendragon slid 3 per cent, or 0.5p, to 16.3p after it warned of reduced levels of supply of new and used vehicles this year.

Ten Entertainment cashed in on friends and families enjoying bowling, escape rooms and pool tables after it posted its highest-ever sales and profit last year. 

It said it hopes to ‘maintain modest like-for-like growth’ this year. Shares fell 0.9 per cent, or 2.5p, to 282.5p.

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