Broker snap: M&S upgraded after strong fourth quarter

Peel Hunt upgrades retailing giant Marks & Spencer (M&S) to 'hold', from 'sell', after strong fourth quarter results beat market expectations in both divisions.General Merchandise sales fell by 3.9% on a like-for-like (LfL) basis, while the broker had expected a 5.5% decline (consensus: -6%). Sales were affected by the timing of Easter and the early start of the Christmas sales, according to the broker.Food LfL sales rose 3.4%, ahead of Peel Hunt/consensus estimates of a 1.3% increase, as the group "continued to drive a high level of newness and product innovation, with circa 25% of the range introduced in the past 12 months," said analyst John Stevenson."We see limited downside at this juncture - clearly there is a tough consumer backdrop environment for the year ahead - however, M&S also appears to be on track to hold its profit position by driving gross margin delivery and space growth," he said.The target price of 325p is held.---bc