Hopes for turnaround fading at M&S, says Credit Suisse

Credit Suisse has slashed its target price for the shares of Marks & Spencer by 15%, saying it sees "few signs of recovery" at the high street department store chain.The bank has cut its target from 425p to 360p and repeated an 'underperform' rating on the stock.It believes hopes are fading for a turnaround and the company's 5% dividend yield is likely to be the only thing providing support for the shares."The combination of slower UK sales growth in September, continued weakness in demand in many of M&S' overseas markets, and the strength of sterling has led us to cut another 2% from our [profit] forecasts," Credit Suisse said.The bank's forecasts are now 5% below consensus for the year ending March 2015 and 12% below for the year after."Earnings momentum has been negative for four years and with second-half expectations already quite demanding, we see little in either the external environment or self-help agenda to suggest that this is about to change," the bank said.Ahead of M&S' first-half results on 5 November, Credit Suisse said the theme is likely to look "very familiar" with an outperformance in the food division offset by weak UK general merchandise sales, and transition-related costs exceeding the benefits of "modest progress" overseas.Interim pre-tax profit is expected to fall for the fourth straight year to £255m, from £262m previously.The stock was more or less flat at 405.6p by 10:48, compared with a 0.9% gain across the wider FTSE 350 retail sector.