Citi still sees 'strategic rationale' for Ocado Retail, raises target for M&S
Citi sounded a positive note on the launch of Ocado Retail, bumping up its target price for Marks&Spencer 's shares to 120.0p in the process.
Food & Drug Retailers
4,071.28
16:40 08/05/24
FTSE 100
8,354.05
16:50 08/05/24
FTSE 250
20,491.99
16:39 08/05/24
FTSE 350
4,592.23
16:39 08/05/24
FTSE All-Share
4,544.24
17:04 08/05/24
General Retailers
4,006.74
16:40 08/05/24
Marks & Spencer Group
266.10p
16:40 08/05/24
Ocado Group
345.90p
16:40 08/05/24
Despite the difficult environment encountered during the year-long planning phase for its launch - which saw increased demand for Ocado - the broker argued that the strategic rationale for the partnership remained intact.
"[Ocado Retail] should allow a wider range of customers to reappraise the M&S offer in terms of breadth of range, relative price and quality in addition to delivering volume synergies," they said.
Citi analysts did lower their estimates for M&S's profits before tax in financial year 2021 from £241m to £166m, but raised that for FY 2022 by 7% to £331m, from £309m, on the back of the "significant" cost restructuring that was under way.
The analysts stuck to their 'neutral' recommendation for shares of M&S.