Broker tips: Marks and Spencer, Wise
By Iain Gilbert
Date: Monday 07 Apr 2025
(Sharecast News) - RBC Capital Markets has reiterated its 'outperform' rating for Marks & Spencer, saying the business was well positioned to defy sector concerns.
As of Friday's close, M&S shares had fallen around 7% so far this year, with investors worried about more aggressive pricing tactics by Asda on M&S's food operations.
However, RBC believes these concerns were "likely overdone", with M&S having the least customer overlap with Asda compared with the other major food retailers. The Canadian broker explained that Asda tends to cater for lower-income customers doing a weekly big shop, whereas M&S customers visit for convenience food, last-minute dinners and/or special occasions.
It also noted that M&S's 50:50 Ocado Retail joint venture should provide more top-line growth, with nearly a third of Ocado Retail sales coming from M&S products.
For the company's clothing and home divisions, RBC said M&S was "pushing on well in areas of existing strength", like knitwear, denim and lingerie, while an improved sourcing outlook should help support margins.
"At 12x CY25 P/E we see potential for further upside as investors reappraise the durability of its growth and exposure to favourable trends, including a flight to quality in food and clothing," the broker said.
Analysts at Berenberg reiterated their 'buy' rating and 1,240.0p target price on FX transfer specialist Wise on Monday following the group's capital markets day last week.
Berenberg noted that Wise hosted "a well-attended capital markets day" on 3 April, during which it detailed its market opportunity, infrastructure, products, marketing initiatives, platform offering and financial model.
"Key takeaways included detail on its expanding marketing efforts and Wise Platform, which the company expects to contribute over 50% of volumes in the long term," said Berenberg.
The German bank stated it continues to think Wise's "relative scale advantage, best-in-class infrastructure and strategy of returning operational and scale efficiencies to its customers" had left it well-position to be "a winner in the cross-border payments space".
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