Marks and Spencer Group PLC's (LSE:MKS) strong finish to the 2026 financial year has reinforced confidence in the retailer’s turnaround story, with investment bank analysts arguing the group still has scope for further upgrades despite a cautious outlook.
Deutsche Bank said the FTSE 100 group's annual results the day before had exited the year “more strongly than we anticipated”, supporting its view that the business was “back on track” with improving sales growth and recovering margins driven by cost efficiencies.
UBS was similarly upbeat, describing M&S as “the best turnaround in UK retail” and saying recent trading had “reinvigorated the growth narrative”.
Deutsche analyst Adam Cochrane said it was “refreshing to see a UK retailer with both LFL growth and new space ambitions”, pointing to stronger food sales and increased investment in store expansion.
In the short-term, he added that management’s shift towards “re-investment for growth” could temper margin expansion, but should support more sustainable long-term sales growth.
Deutsche Bank's 'buy' rating and 435p price target were reiterated, despite Cochrane trimming 2027 profit forecasts by 6%.
UBS analyst Yashraj Rajani highlighted “strong momentum and structural gains”, noting food margins reached a record 6.9% in the second half despite efforts to maintain value for customers.
He also pointed to “healthy cash flow generation” and said debate around higher shareholder returns could “resurface” later in the 2027 financial year as investment spending moderates.
The Swiss bank maintained its 'buy' rating and 425p price target.