Marks and Spencer is heading back to the FTSE 100, according to Deutsche Bank, which reiterated its buy rating and increased its target price to 235p from 210p.
“The proof of the turnaround pudding is in the tasting,” said the broker, commenting on the retailer's jump in full-year profits and revenues.
Growth in sales and revenues, alongside “unabashedly bullish guidance,” was delivered in an “undisputedly tough retail environment.”
Deutsche Bank points to the success of the last 12 months on M&S’ products, both in food and clothing, resonating with consumers, which was supported by investments in stores, online and supply chains.
Shares are up 45% this year so far, but the broker believes there is room for further growth.
“The combination of a return to like-for-like growth, tough decisions being made on costs and a balance sheet likely to head back to investment grade should see investors revisit the investment case,” Deutsche Bank said.