SocGen raises M&S target price but sees little upside

LONDON (ShareCast) - Societe Generale (Paris: FR0000130809 - news) has lifted its target price for Marks & Spencer (Other OTC: MAKSF - news) but maintained a 'hold' rating on the high street retailer, saying it sees little upside from current levels. Sentiment towards the stock is "now much more positive than it was as recently as October when we saw the price-to-earnings ratio (P/E) around 10x and the dividend yield around 5%", the broker said.

Now (NYSE: DNOW - news) , the P/E is around 15 and the dividend yield is just 3.5%.

"Market optimism on the stock leaves little scope for upside surprise," Societe said.

Meanwhile, the broker said it no longer reckons M&S will produce a meaningful recovery in general merchandise (GM (NYSE: GM - news) ) like-for-like (LFL) sales in the foreseeable future.

Ahead of trading update on Thursday, Societe has pencilled in a 1.5% decline in GM LFL sales and a flat performance in the food division, slightly worse than consensus forecasts of -1.1% and +0.5% respectively.

The target for the shares has been raised from 492p to 524p, "mainly to take account of the rise in the equity market since we last published in January", the broker said.

M&S was trading 1.7% higher at 539.1p by 10:34 on Monday.