Marks & Spencer share price heads south again as SocGen trims rating

on May 27, 2016
Updated: Oct 21, 2019

Shares in Marks & Spencer Group (LON:MKS) have fallen into the red in today’s session, underperforming the broader London market, as analysts at Societe Generale cut their rating and price target on the stock. The move comes in the wake of the blue-chip group’s full-year results and strategy update which have prompted a string of brokers to cut their stance on the retailer.

As of 13:15 BST, Marks & Spencer’s share price had lost 1.15 percent to 386.10p, underperforming the benchmark FTSE 100 index which currently stands 0.04 percent lower at 6,263.10 points. The retailer’s shares have lost some 13 percent of their value this week.
Societe Generale lowered its stance on M&S from ‘buy’ to ‘hold’ today, and trimmed its price target on the stock from 545p to 424p. The rating action came after the FTSE 100 retailer warned earlier this week that the new plan of the group’s chief executive Steve Rowe to turn around the company’s fortunes would impact short-term profits.

“We do not expect sustainable like-for-like sales recovery at any point,” the French bank was quoted as saying. “It is difficult to disagree with the measures that are being taken in response to detailed customer feedback, but there is very low visibility on recovery at this stage in our view.”
Societe Generale pointed out that M&S was still worth holding for the total dividend yield, and that it remained strongly cash generative, backed by healthy margins and growth in the food business, with a commitment to making ongoing surplus cash returns to shareholders.
“The seven-percent total estimated dividend yield is attractive,” the bank pointed out. The analysts, however, however, noted that they “would need more than 15 percent total shareholder return to retain the ‘buy’ recommendation”.
As of 14:03 BST, Friday, 27 May, Marks and Spencer Group Plc share price is 386.40p.