- Marks & Spencer Group
- 16 September 2024 14:46:22
Source: Sharecast
The bank said the M&S share price has performed well year-to-date but it sees further upside driven by food outperformance, clothing full price sales and the retailer’s strong cash generation.
"Food price and value perception strong," RBC said. "We think other grocery retailers have been more focused on loyalty and the value end of their offers.
"Also, the eating out to eating in trend has helped M&S in our view."
RBC noted that for the latest 12 weeks to 1 September, Kantar data suggested food value growth was 11.7% year-on-year versus the market at +3.4%, with volume growth at +9.4%, versus 1.5% for the market.
"However, M&S' H1 result will be affected by the lack of an Easter food shop and no Coronation this year," it added.
As far as clothing is concerned, RBC said M&S "held its nerve over the summer".
"We note that M&S didn't go on sale until August this year. We also think it has seen a positive margin mix effect from Autograph outperformance," it said.
Elsewhere, Berenberg lifted its price target on JTC to 1,400p from 1,300p on the back of news it has acquired Citi Trust - the global fiduciary and trust administration services business - from Citigroup for $80m.
"Strategically, the deal builds upon JTC's already-established trust platform, particularly in the US (following the acquisitions of New York Private Trust Company, South Dakota Trust Company and First Republic Trust Company), and marks a significant positive shift in the group's profile given Citi Trust's reputation as one of the oldest and most established fiduciary business globally," the bank said.
Financially, Berenberg said, the deal terms are compelling, with clear commercial and cost synergies to be had over the coming years.
It expects completion at the end of the first half of 2025, and upgraded its earnings per share forecasts by around 3% in FY25 and 10% in FY26.
Berenberg said: "We moved our price target recently (to 1,300p from 1,150p), acknowledging JTC's future M&A pipeline and compounding track record; however, the strength of today's announcement means we move the price target again, to 1,400p, to reflect 1) a not unreasonable FY26 price-to-earnings of 22x, when more of the acquisition's benefits will be felt following integration, and 2) the quality at hand."
Berenberg maintained its ‘buy’ rating on JTC.