Hargreaves Lansdown argues that investors will need to take a ‘leap of faith’ with Marks & Spencer Group (LON:MKS), Citywire reports. The comments came after the blue-chip retailer updated investors on its full-year performance yesterday, posting a hefty fall in profits.
Marks & Spencer’s share price rallied on the back of the company’s update yesterday, gaining as much as 5.17 percent to close at 306.90p, and significantly outperforming the benchmark FTSE 100 index which closed deep in the red. Despite the previous session’s rise, the retailer’s shares remain more than a fifth down over the past year, placing the group in danger of relegation from the blue-chip index.
HL weighs in on M&S results
Citywire quoted Hargreaves Lansdown analyst Laith Khalaf as saying yesterday that Marks & Spencer was struggling to compete with companies with a strong online presence and reducing high street footfall.
“M&S is currently restructuring its business to make it more relevant, less costly, and more profitable,” the analyst pointed out. “For investors, a dividend yield of over six percent is an attractive stopgap, but at the moment [chief executive] Steve Rowe’s promise to make M&S special again requires a leap of faith.”
Khalaf added that the retailer’s potential relegation from the FTSE 100 as online supermarket Ocado looks set to join painted “a picture of the old economy and the new, passing each other in very different directions”.
Other analysts on retailer
Peel Hunt continues to see M&S as a ‘buy,’ without specifying a price target on the shares, while UBS, which is ‘neutral’ on the retailer, set a valuation on the stock of 275p yesterday. JPMorgan Chase & Co, which rates the FTSE 100 company as a ‘sell,’ set a price target of 250p. According to MarketBeat, Marks & Spencer currently has a consensus ‘hold’ rating and an average price target of 320.11p.