Investec lifts M&S target after forecast-beating results

LONDON (ShareCast) - After a weak start to Wednesday's trading session, shares in Marks & Spencer (Other OTC: MAKSF - news) jumped into the green after the department store retailer's results beat forecasts, with Investec (LSE: INVP.L - news) lifting its target price on the stock. The broker raised its target for the shares from 580p to 620p and kept a 'buy' rating, saying it sees "upside risk to forecasts".

M&S reported an underlying profit before tax of £661.2m for the year ended 28 March, up 6.1% on the year before and ahead of Investec's £646m forecast.

Like-for-like sales were down 1% over the year, but did return to growth in the final quarter due to improvements in General Merchandise (GM (NYSE: GM - news) ).

"FY15 PBT is ahead of expectations, partly attributable to a better gross margin performance within GM, suggesting Q4's return to positive LFL territory was not driven by increased promotional activity/markdown," Investec said.

"A more confident outlook, highlighting the material gross margin opportunity within GM, ongoing outperformance within the Food business, with more space opening, and the announcement of capital returns, should be taken well in our view." M&S was up 1.4% at 593.68p by 11:19, bouncing from an intraday low of 576p early on.