Marks & Spencer share price up amid Barclays comments

Marks & Spencer’s share price (LON:MKS) has climbed higher in London this afternoon as Barclays maintained its ‘overweight’ rating on the blue-chip retailer. Proactive Investors quoted the analysts as commenting that the group’s restructuring plan left it well-placed to deal with the challenge of launching its online grocery business.

As of 14:40 BST, Marks & Spencer’s share price had added 1.67 percent to 207.60p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.04 percent lower at 7,413.68 points. The retailer’s shares have given up more than 26 percent of their value over the past year, as compared with about a one-percent fall in the Footsie.

Barclays still ‘overweight’ on M&S

Barclays reaffirmed M&S as an ‘overweight’ today, while trimming its price target on the stock from 320p to 290p. The move came in the wake of the company’s full-year results last month, when the high street retailer posted a fall in revenue and profits, and unveiled a rights issue as it looks to finance its joint venture with Ocado (LON:OCDO).

Proactive Investors quoted the analysts as commenting that they think that “M&S management has outlined a sensible plan with respect to its UK store estate, its clothing and home proposition and the loss-making elements of its owned international business”.

“This leaves M&S relatively well-positioned to deal with the challenges of foreign exchange headwinds and online growth,” the broker added.

Analysts upbeat on cash generation

Proactive Investors further quoted Barclays as commenting that cash generation has always been a core part of its investment thesis on M&S and the free cash flow yield remains hard to ignore, even after the rights issue. The analysts estimate that the company will generate about £1.5 billion of free cash flow over the next three years against a £4-billion market capitalisation.

According to MarketBeat, the blue-chip retailer currently has a consensus ‘hold’ rating, while the average target on the Marks & Spencer’s share price stands at 257.67p.