Broker tips: M&S, Rolls-Royce, Thor Explorations
By Iain Gilbert
Date: Monday 20 Oct 2025
(Sharecast News) - RBC Capital Markets downgraded Marks & Spencer to 'sector perform' from 'outperform' on Monday but lifted its price target on the stock to 400p from 375p.
"M&S should be well-positioned, given its strength in premium food and it has been fighting to win back customers in fashion," said RBC Capital. "However it remains a UK consumer proxy, we think execution risk is higher post recent cyber disruption, and we think valuation upside is less than for some other retailers."
In food, RBC expects M&S to continue to gain share on account of its exposure to premium, specialty, healthy food, and its more regular innovation from this year, while in clothing, the Canadian bank expects M&S to push on well in areas of existing strength, and noted that the womens' fashion offer has strengthened in recent years.
"We think the UK mid-market has become less competitive since the pandemic due to capacity withdrawal," RBC said. "But M&S still has a lot of work to do to improve the efficiency of its supply chain, to become more competitive with best-in-class peers."
RBC said that following a strong recent recovery in the shares, M&S is now trading at 13x CY26e price-to-earnings, which it considers fair versus Sainsbury at 13.5x, Tesco at 14.5x and Next at 16.5x.
Analysts at Berenberg upgraded British multinational Rolls-Royce to 'hold' from 'sell' on Monday and hiked its target price from 240p to 1,080p as it took a fresh look at the aerospace and defence sector.
Berenberg said its upgrade was a result of "more favourable fleet dynamics" to 2035 and the "significant operational improvement" underway in the group.
The German bank said free cash flow generation will be supported by an increasing share of engines that sit within the cash-without-cost age bracket to 2035, according to its estimates.
However, Berenberg noted that time and materials headwinds from a declining portion of engines in service that were above 20 years old would be a partial offset.
"We forecast an 8.8% CAGR in engine retirements over 2025-35. This contributes to a decline in the proportion of engines aged over 20 years from c21% in 2024 to c12% in 2035. The 20-years-plus age bracket is a profitable off-LTSA (long-term service agreement) period towards the end of an engine's life, and this therefore represents a profitability headwind over the period, in our view," Berenberg said.
Berenberg estimates the company's in-service engine fleet compound annual growth rate to 2044 will increase by up to 260 basis points if it gains share on the next-generation single-aisle programmes.
"The shares trade on 2027 P/E of 31x and an FCF yield of 4.4% - a level that offers limited scope for a further re-rating, in our view," added Berenberg.
This year's huge rally in the share price of Thor Explorations has further to run, according to Canaccord Genuity, which hiked its target price for the West African-focused gold producer.
Despite a more than 300% surge in the shares over the year to date, from around the 17p level to Friday's 68.6p, Canaccord sees further upside, raising its target from 49p to 89p.
"Thor continues to deliver operationally. This has translated to significant free cash flow and capital returns for investors, propelling the share price +316% YTD, making THX one of the best-performing gold stocks in the world," Canaccord Genuity said. "Beyond this, we see several compelling growth levers that investors should look towards for further value-creation."
Canaccord said the first growth lever was a possible extension of the life of its Segilola project, while the recent rally in gold prices - setting new records at around $4,270 an ounce on Friday - meant that previously uneconomic volumes will now be "quite profitable", with the reserve being calculated at just $1,650/oz in 2021.
The Canadian bank also pointed to the prefeasibility study at the Douta project, expected by the end of 2025, which could be a "potential catalyst for the stock", and its Guitry project as another, with the asset continuing to see impressive results.
"We believe that there is a significant amount of value contained in the share price for 1) growth options (partially accounted for in our NAV formulation), and 2) the likelihood of mine life extensions," added Canaccord, which reiterated its 'buy' rating on the stock.
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