Marks and Spencer received a 44% target price hike from Deutsche Bank, which believes the outlook for consumers is “noticeably less chilly” in 2023.
A new target price of 210p has been set for M&S, while it was also upgraded to a buy from a hold.
Analysts at the German bank believe 2022 ended on a good note for retailers in general, and that there is a less bearish view on consumer outlook.
Cost inflation is also set to reverse into a tailwind in the second half of the year, Deutsche Bank said.
Operating costs will remain a challenging factor, although with energy bills falling, much of this will largely be wage inflation that has to be managed.
As a result, retailers will begin to recover some lost margins over the last few years, with Deutsche Bank favouring clothing retailers over hardlines, discounters over mainstream and physical over online.
Deutsche Bank’s top picks are M&S, B&M and AB Foods.
Aside from M&S, Deutsche Bank dished out double-digit target price hikes to boohoo, B&M, ASOS, Pets at Home and WH Smith, while Kingfishers had its target price cut by 5%.