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Shares in Marks & Spencer advance 2.9 percent as traderspoint to the impact of an HSBC upgrade on the company which, thebank says, is the most operationally geared large cap retailerit covers to play on the UK consumer recovery.
"The UK macro outlook is improving. HSBC Economics forecasts1.2 percent GDP growth for FY13 and 2.2 percent growth in FY14(vs 0.2 percent growth in FY2012)," HSBC writes in a note.
"Consumer confidence appears to be on the rise impacted byan improved outlook for employment and rising UK house prices.We expect growth in consumption expenditure by default."
M&S tops Britain's FTSE 100 leader board after theHSBC upgrade, to "overweight" from "neutral", with the bank alsoraising its target price on the stock - which currently tradesat 492.60 pence - to 550 pence from 490 pence.
Trading volume in M&S is robust at around 60 percent of its90-day daily average, against the UK benchmark on 33 percent.
The bank says that M&S has about 90 percent revenue exposureto the UK consumer, while Kingfisher, which has similarUK operating margins and fixed cost cover, has 40 percent. Next, meanwhile, is the least operationally geared large cap.
HSBC retains its "overweight" rating on Kingfisher, whileleaving its "neutral" rating on Next.
Marks & Spencer looks good value against its peers, tradingon a 12-month forward price/earnings ratio of about 13.7 times,against Kingfisher on about 15.4 times and Next on around 14.6times, according to Thomson Reuters Datastream.
Reuters messagingrm://tricia.wright1.thomsonreuters.com@reuters.net
