| CATEGORY: BROKER RECOMMENDATIONS SECTOR: GENERAL RETAILERS |
Broker snap: M&S caught out by downturn, JPM said |
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Fri 31 Oct 2008
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LONDON (SHARECAST) - Marks and Spencer has been caught out by the economic cycle over the past year-and-a-half, JP Morgan said as it cut its target price on the clothes and food retailer by 15p to 235p.
M&S’s lack of foresight has led to over-expansion, over-ordering and a large increase in operating costs but a neglect of long overdue work on its infrastructure, the broker, which keeps its ‘neutral’ recommendation on the stock, said.
JPM whose target price is based on its ‘discounted cash flow’ valuation of the firm, said this could be boosted to 400p if M&S took measures such as moving its clothing and food businesses closer together in price and quality, reducing clothing markdowns and improving its lingerie offering.
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