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Marks & Spencer weak as Credit Suisse cuts its rating to ‘underperform’ from ‘neutral’

The Swiss bank lowered its earnings per share forecasts for the FTSE 100-listed firm by 16% and 27% for 2019 and 2020, respectively, with risks to the downside

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It reduced its target price for M&S shares to 250p from 315p, with the shares currently trading at 281p

Credit Suisse has cut its rating for Marks & Spencer Group PLC (LON:MKS) to ‘underperform’ from ‘neutral’ after reducing its target price and estimates for the high street retailer on concerns over its focus on Food after its online joint venture.

The Swiss bank lowered its earnings per share forecasts for the FTSE 100-listed firm by 16% and 27% for 2019 and 2020, respectively, with risks to the downside, and reduced its target price for the stock to 250p from 315p.

READ: M&S to open superstores that stock full food range ahead of online delivery launch with Ocado

In a note to clients, Credit Suisse’s analysts noted that in February M&S and Ocado PLC (LON:OCDO) announced an online food joint venture that will allow M&S to sell its full range of food online for the first time, by replacing Waitrose on Ocado’s platform from September 2020

They pointed out that M&S's response to fragmentation and loss of market share for Clothing & Home is to try to double its Food market share and make it a full shop, hence the Ocado joint venture.

However, the analysts said, this is coming at a time of increasing competition for M&S’s core offering and they see long-term pressure on its like-for-like sales and margins.

In early morning trading, M&S shares were down 2.6% at 281p.

Quick facts: Marks and Spencer Group PLC

Price: 186 GBX

LSE:MKS
Market: LSE
Market Cap: £3.63 billion
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