Marks & Spencer Shares ‘Grossly Under-Rated’ if it Meets Shore Capital’s FY27 Expectations

Marks & Spencer (LON: MKS) shares could be “grossly under-rated” if the retailer delivers on Shore Capital’s unchanged forecasts for fiscal 2027, the brokerage said after the company reported a solid trading update on Thursday.

Shore Capital, which classifies Marks & Spencer as a “House Stock”, kept its profit before tax estimate for FY26 at £655 million and made no adjustments to FY27 expectations, arguing that the latest numbers provide reassurance following a year marked by operational challenges.

The firm said FY26 is not central to the investment case, but maintaining momentum into next year would justify a re-rating.

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Food sales rose 6.6% in the 13 weeks to 27 December, while Ocado Retail, in which Marks & Spencer owns a 50 percent stake, delivered a 13.7% increase.

Fashion, Home and Beauty sales fell 2.5% amid softer footfall and unseasonably mild weather, though online demand improved. International revenue grew 0.9%.

Shore Capital said the performance was resilient given “the wider context of the operational challenges from April 2025,” highlighting lower food wastage and stronger engagement from family shoppers.

The firm expects FY26 food profits to be around £30 million higher year on year, offsetting a similar decline in non-food.

On Shore Capital’s FY27 estimates, the shares trade on a price-earnings ratio of 9.7 times and an EV/EBITDA multiple of 5.2. The broker said that if Marks & Spencer meets or exceeds those forecasts, the current valuation represents a clear discount to peers such as Next, Sainsbury’s and Tesco, according to the firm.