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Marks dressed down by Deutsche

Published: 10:20 27 May 2016 BST

Pictured an underwear model

Deutsche Bank becomes the latest broker to get the red pen out for High Street bellwether Marks & Spencer Group PLC (LON:MKS), clipping the target down to 440p from 565p previously.

In a note entitled "Dressing down", analyst Charlie Muir-Sands says Deutsche has cut its forecasts in the light of the group's in-line results, margin and cost guidance and self-inflicted sales cut.

The shares tanked 8% on Wednesday as the firm warned that turning around its struggling clothing arm would hit profits.

Muir-Sands said new man at the helm Steve Rowe is seeking a major repositioning for the clothing business back to lower priced products and aiming to wean his 32million customers off the promotional ‘drug’.

"Only time will tell if it works, though past precedents (e.g. Debenhams) and early successes provide some comfort," he notes.

The balance sheet and free cash flow remain strong supporting a dividend programme we forecast will yield 7%, he adds.

"We lower our target to 440p but maintain our Buy rating."

Meanwhile, Societe Generale moves Marks down to 'hold' from 'buy'.

Also in brokerland today, Goldman Sachs downgrades storage specialist Big Yellow Group PLC to 'neutral' from 'buy', while easyJet's (LON:EZJ) wings are clipped back a tad by Deutsche, who repeats a 'buy' but lowers the target price to 1830p from 1850p.

Back to retail and wholesaler Booker Group PLC (LON:BOK) is one of the very few listed food retailers  JP Morgan Cazenove says it would recommend owning taking a "long term" view.

It rates shares 'overweight' and lifts the price target to 215p from 200p.

Booker has best in-class management and exposure to the growing segments of convenience, discount and online, on top of operating a successful core C&C (cash and carry) format (both from a size and a customer mix standpoint).

"This has translated in double-digit EBIT growth for nine consecutive years and the highest sustainable FCF generation and dividend yield in the sector," notes JP Morgan Cazenove.

Elsewhere. Shore Capital is bullish on potash mine developer Sirius Minerals PLC (LON:SXX), describing it as a future ‘fertiliser juggernaut’  and predicts around 150% up side to the AIM share’s price.

The broker rates Sirius a 'buy' and reckons the North Yorkshire polyhalite mine development will be a ‘paradigm-shifting’ project.

Sirius shares, it thinks, will see a significant re-rating once the first phase of project finance is secured – he notes that a US$1.6bn package is anticipated as a mix of debt and equity, while phase 2 would be more traditional project financing.

“While an investment in Sirius will become progressively de-risked as the company advances towards production, we believe that it already offers a more robust, lower-risk investment with the prospect of better returns than typical of its peers.”

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