UBS has trimmed its price target for Marks and Spencer Group PLC (LSE:MKS), nudging it down from 465p to 450p, while also slightly lowering profit forecasts for the next two years.
The revisions reflect a cautious approach to M&S’s food margins, which UBS expects to come under pressure as the retail sector grapples with price competition.
Still, the overall investment case remains strong. M&S’s premium positioning and focus on quality should help shield it from the full force of price cuts seen in the broader grocery market, and UBS continues to rate the stock a ‘Buy’.
Marks has been gaining market share across both its food and clothing divisions, supported by positive third-party data from Nielsen and Kantar.
UBS’s own research suggests M&S customers increasingly see the brand as offering good value, an important factor as household budgets remain stretched.
The company’s balance sheet is also in its best shape in over a decade, giving it financial flexibility for future investment and shareholder returns.
While competition in everyday food essentials is likely to heat up, M&S’s focus on own-label and top-up shopping means it is less exposed than rivals locked in direct price wars.
With shares currently trading at 328.7p, unchanged on the day, UBS sees a potential re-rating ahead, particularly as M&S continues to deliver on its turnaround strategy.
The stock is now priced at just 10 times expected earnings for 2026, a discount to historical averages and peers.
UBS acknowledges the retailer may strike a cautious tone when it reports full-year results in May, given the backdrop of rising costs and broader consumer uncertainty.
However, if M&S maintains its recent momentum in sales and margin growth, further upgrades and renewed investor confidence could follow.