Broker tips: M&S, Persimmon, JD Wetherspoon

Shore Capital has maintained a 'hold' rating on Marks & Spencer but has hailed the retailer's latest trading update, which showed an unexpected return to growth in general merchandise sales in the fourth quarter.

"At this juncture we believe it is wise for us to watch and wait to see if there is a follow-through on the improving GM trends at M&S, noting favourable multi-year comparatives, before we allow ourselves to be demonstrably more assertive with respect to our current 'hold' recommendation on the stock," the broker said.

After a strong run in Persimmon's share price, UBS has downgraded its rating on the housebuilder from 'buy' to 'neutral'.

With the shares trading at 11.5 times estimated earnings for 2015 (a 15% premium to the sector) and a 2.5 times tangible net asset value (a 40% premium), the bank said: "We do not see sufficient upside to the shares". However, it did predict that Persimmon has the potential to accelerate its capital return plan to investors.

Canaccord Genuity has decided to retain its 'hold' stance on pub operator JD Wetherspoon after putting it under review, but lowered its target for the share price from 800p to 750p.

Recent price cuts and higher marketing and labour costs will "squeeze [operating] margins", the broker said, while guidance for new pub openings has been reduced. Canaccord said: "We believe the catalyst for a re-rating would be an expansion in operating margin; however, we do not anticipate this to happen in the near future, hence our 'hold' recommendation."