RBC Capital downgrades Marks & Spencer to 'sector perform'
By Michele Maatouk
Date: Monday 20 Oct 2025
(Sharecast News) - RBC Capital Markets downgraded Marks & Spencer on Monday to 'sector perform' from 'outperform' but lifted the price target 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," the bank said. "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.
"We expect M&S to consolidate its 50% share of Ocado Retail, which should be broadly earnings neutral but should provide a further top line impetus given the structural growth of online retail," it said.
In Clothing, the 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," it 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.
At 1030 BST, M&S shares were down 0.9% at 398.52p.
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