M&S share price forecast: What’s next for the UK retailer?
British multinational retailer Marks and Spencer Group witnessed a strong surge in its MKS stock price in 2021, owing to a rebound from the pandemic and years of reshaping within the company.
The firm did suffer from the impact of Brexit on its business operations last year. The company closed 11 of its French stores in the second half of 2021, as new customs regulations and tariffs took a toll on its supply chain following the UK’s exit from the European Union (EU). But the retailer’s aggressive implementation of new business initiatives and company restructuring helped buoy the stock price.
Let’s take a look at the MKS stock overall performance in 2021 and consider which factors may drive Marks & Spencer’s future share price in 2022 and beyond.
Marks & Spencer stock analysis
Marks & Spencer stock surged nearly 70% during the entirety of 2021. The stock closed at 231.40p on 31 December 2021, increasing from its 4 January 2021 closing price of 131.40p. However, the MKS stock has started 2022 on a bearish note, having lost 20% of its value year-to-date (YTD) as of 17 February 2022.
According to the Marks & Spencer stock technical analysis (as of 17 February), the relative strength index (RSI) was pointing to ‘neutral’ at 28.69. However, the stock’s moving average convergence divergence (MACD) plunged to the negative territory, giving a ‘sell’ signal based on a reading of -9.81.
Meanwhile, the MKS stock closed at $190.85 on 16 February, which was above its 200-day moving average at 186.20p, indicating a bullish signal for the stock’s price movement looking ahead.
The company had a market capitalisation of $5.71bn (£4.19bn, €5bn) as of 17 February, according to CompaniesMarketCap.
M&S fundamental analysis: Latest earnings
The company released its financial statement on 10 November 2021 for the half-year ended 2 October 2021.
The results revealed the group swung upward to an after-tax profit of £159.9m in the 26-week period from an after-tax loss of £71.6m a year earlier. The firm’s basic earnings per share (EPS) stood at £0.0819, turning from a loss per share of £0.035 in the same period. Statutory revenue rose to £5.105bn from £4,090bn. The firm did not declare an interim dividend for the reported period.
All of the company’s main businesses reported underlying improvements in the reported period. M&S Food’s growing market share remained consistent, owing to its good quality and perceptions of improved value. Ocado Retail, which has been jointly owned by Marks & Spencer and Ocado Group since 2019, opened three new controlled foreign corporations; its planned capacity growth is more than 50% since Marks & Spencer’s investment.
The firm’s improved financial results and a strong focus on working capital management have also generated free cash flow and a further reduction in net debt. Net debt plunged by 22.6% to £3.15bn in the 26-week period, down from £3.82bn a year earlier.
Marks & Spencer’s strong performance in the reported period was a result of the combined effects of reshaping the business and a firm rebound from the pandemic:
“The objective of our transformation programme is to restore the M&S business and brand, to deliver long-term, sustainable, profitable growth for our investors, colleagues and wider communities,” the company stated.
“In a year defined by the pandemic, through our Never the Same Again programme, we have accelerated our transformation and forged a reshaped business as we emerge from the crisis.”
The company reported group sales of £3.3bn (an 8.9% rise from pre-pandemic levels) during the 13 weeks to 1 January 2022.
Considering this performance, Laura Hoy, equity analyst at Hargreaves Lansdown, said:
What could drive the Marks & Spencer stock forward?
Marks & Spencer has been actively seeking to grow its reach and brand presence online in a bid to boost sales since the onset of the pandemic.
The firm launched its first clothing rental trial with clothing rental website Hirestreet on 16 November 2021. Hirestreet is operated by the Zoa Group, where Marks & Spencer has invested in via its Founders Factory Joint Venture accelerator programme. The move comes amid growing customer concerns over sustainability, leading the company to consider and step into business in the clothing rental market.
The company also launched M&S Live – live shopping via M&S.com – on Monday 28 January 2022. The service, facilitated by M&S software partner LiSA, allows customers to visit M&S.com each week to join a live broadcast hosted by an M&S expert, where they are introduced to products they may want to purchase. Marks & Spencer expects this new shopping experience will occupy 10%–20% of global e-commerce by 2026.
Other digital-savvy initiatives from M&S include the launch of its new digital Click & Collect format on 26 July 2021, which the company says has reduced waiting times and helped its customers to process 70,000 self-service returns, and online video consultations for customers browsing furniture, menswear and lingeries on M&S.com, which reported a growing take-up of 28,000 consultations in nine months.
Marks and Spencer (MKS) share price forecast: What are analysts saying?
Are Mark & Spencer (MKS) shares a ‘buy’, ‘sell’ or ‘hold’? Analyst ratings compiled by MarketBeat gave different price targets. As of 17 February, the consensus rating was ‘buy’, based on eight analysts’ views, with five rating the MKS stock as a ‘buy’ and the remaining three rating it a ‘hold’.
The analysts’ consensus 12-month MKS stock price target was 236.13p. Stock projections varied from the low price target of 184p to a high of 265p.
Among the recent ratings, Barclays rated the stock as ‘overweight’ with a price target of 215p. Morgan Stanley rated the stock as ‘equal weight’ and set the price target in a range from 172p–184p.
Commenting on the Marks and Spencer stock forecast, Mikhail Karkhalev, an analyst at Capital.com, said:
On the other hand, algorithm-based site Wallet Investor was bearish in its M&S share price forecast as of 17 February. It expects the MKS stock to fall to 164.81p by the end of December 2022, gradually decline further to 128.36p by the end of 2023 and reduce to 54.36p by the end of 2025.
Although the service did not provide a Marks and Spencer share-price prediction for 2030, it estimated the retail stock could hit as low as 10.28p by February 2027.
When looking for Marks & Spencer stock predictions, it’s important to bear in mind that analysts’ forecasts can be wrong. Projections are based on making fundamental and technical studies of the MKS stock performance. Past performance is no guarantee of future results.
It is important to do your own research and follow the latest Marks & Spencer share news. Your decision to trade should depend on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. Remember, you should never invest money you cannot afford to lose.
FAQs
Is Marks & Spencer a good investment?
Whether MKS stock is a suitable investment for you will depend on your opinion of the company and your personal investment objectives. You will also need to research the stock and use this information to decide whether it meets your needs.
Why has the Marks & Spencer share price been going down?
The MKS stock rebounded from the pandemic’s dip, showing a 70% growth for the full year over 2021. However, the stock has been 20% down year-to-date as of 17 February 2022.
Despite the retracement in the stock’s price, M&S’s fundamentals seem strong, with the company benefiting from its transformation programme. However, it is yet to be seen whether Marks & Spencer will manage to sustain its current sales growth.
Meanwhile, analysts and algorithm-based forecasts provided mixed views regarding the Marks & Spencer stock’s future performance as of 17 February.
Will Marks & Spencer shares go up or down?
Opinions vary. The consensus view of Wall Street analysts (as of 17 February) compiled by MarketBeat was that the stock may rise to 236.13p over the next 12 months. The algorithm-based forecast from Wallet Investor showed the stock price reducing to 128.36p as of December 2023.
However, it’s important to realise that analysts or algorithms may be wrong. You’ll need to carry out your own research in order to form an opinion.
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