Peel Hunt analyst Jonathan Pritchard raised Marks & Spencer (MKS) from ‘hold’ to ‘buy’ on hopes the department store’s new boss will revive sales at its troubled clothing division.
Steve Rowe has succeeded Marc Bolland as chief executive, stepping up from his previous role as head of general merchandise. However, he will continue to lead the division, which sells clothing and homeware and which saw margins improve and sales stall under Bolland.
‘The (GM) business unit directors will continue to report to me for the foreseeable future because that's where I believe the priority is...We need to get GM working,’ Rowe told Reuters.
Pritchard raised his target price for the shares from 400p to 450p saying he looked forward to hearing what Rowe would have to say at the full-year results next month.
‘First comes the Q4 interim management statement, which will look grim but the shares care more about the “world according to Steve”. We expect him to set out a pathway to recovery: 2010 to 2015 was profoundly disappointing.
'Our view is that within general merchandise, margin should be invested to improve product quality and value for money.’
He added: ‘short-term pain is required if M&S is to return to past earnings levels in a sustainable manner. We believe it can do so, and though it won’t all be plain sailing.’
The shares firmed 3.3p to 410.6p.
Tool hire company Ashtead Group (AHT) is trading in line with US rival United Rentals despite better revenue and profit growth.
Jefferies analyst Justin Jordan retained his ‘buy’ recommendation and target price of £13.85 explaining: ‘Ashtead underperformed and trades in line with United Rentals, despite a consistent track record of better revenue and profit growth, delivering higher returns with lower leverage,’ he said.
‘While expecting mixed United Rentals Q1 [results] on 20 April, for Ashtead with easing energy comparisons, improving US macro and potential buybacks, we see [a] 2016 re-rating.’
Jordan added that while there have been concerns about a US recession ‘Ashtead underperformance seems overdone’.
The shares closed 11p or 1.3% lower at 846.5p.