Broker snap: Citi remains upbeat about M&S prospects

Marks & Spencer's share price was extending gains on Friday morning after Citigroup maintained its 'buy' rating for the stock on the back of a confident outlook.The stock rose strongly on Thursday following its third-quarter results despite the company failing to meet forecasts with its like-for-like (LFL) sales, with sentiment propped up by upbeat comments from a number of analysts.LFL sales in the UK fell by 0.2% in the three months ended December 28th, some 100 basis points lower than Citi's forecasts. Total sales rose by just 1.5%, below the 2% expected by the US bank, with ongoing weakness in General Merchandise (GM) outweighing a strong Food performance. Citi said that the 'miss' mainly reflects the highly promotional UK clothing market in the run-up to Christmas.However, the bank remains bullish: "The combination of our stronger 2014 and 2015 UK economic growth forecasts, and M&S management initiatives (especially on GM availability) has markedly improved the credibility of double-digit FY15 and FY16 M&S earnings per share growth forecasts."We argue that this should underpin the group's current undemanding valuation metrics."The bank's 510p target price equates to a price-to-earnings ratio of 13.The stock was up 2.04% at 470.3p by 10:40 on Friday, trading at not seen since the start of December.BC