Marks & Spencer Shares are ‘Too Lowly Rated’ Says Analyst

Shore Capital reiterated its bullish stance on Marks & Spencer (LON: MKS) in a note on Monday, calling the retailer’s shares fundamentally undervalued after the company announced the £67.5 million acquisition of a former Asos logistics warehouse in Lichfield, Staffordshire.

Analyst Clive Black said the purchase, which Shore Capital believes can be funded comfortably from existing cash resources, supports M&S’s ambition to double its UK online non-food sales.

The 437,000-square-foot, fully automated facility in the English Midlands is expected to be integrated by 2027, ahead of that year’s peak trading period, and will bring roughly 600 new jobs to the local economy.

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Shore Capital sees M&S as “too lowly rated” and “notably detached on the low side from peer group valuations,” adding that the acquisition demonstrates “good agility and balanced risk management” compared with commissioning a new-build alternative.

John Lyttle, managing director of M&S’s Fashion, Home and Beauty division, said the deal reflects the company’s commitment to disciplined capital allocation.

“This acquisition does just that, delivering tangible business benefits that move our transformation forward, at a much lower cost compared to a new build option,” he said.

Shore Capital, which carries M&S as a house stock (a company for which they act in an advisory capacity), said the full financial benefit of the facility is expected to come through in fiscal 2029.

With the company trading at around 10 times its fiscal 2027 earnings estimate, Black said he sees “scope for material short-to-medium term upside” in the shares. M&S is due to report full-year results on May 20.