MARKET REPORT: M&S gets a rare double upgrade from Goldman Sachs

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Double upgrade: Goldman Sachs analysts said they saw improvements in Marks and Spencer


Marks & Spencer started the week with a bang as it was bestowed a rare double upgrade from analysts at Goldman Sachs.

They U-turned on their own advice, swinging from a ‘sell’ recommendation to ‘buy’.

This represents a rare boost for the retailer, which has continued to struggle despite being years into a plan to turn the company around and was booted out of the FTSE 100 in September.

Goldman analysts said they saw improvements in its crucial womenswear division from a low point in April.

Double upgrade: Goldman Sachs analysts said they saw improvements in Marks and Spencer’s crucial womenswear division from a low point in April

And they were impressed that M&S avoided the sort of deep Black Friday discounting that could have shredded margins.

Brokers also raised the target price on its stock from 170p to 220p. M&S shares closed up 3.5 per cent or 7.1p, at 208.3p.

Engineering group Senior soared 7 per cent, or 12.4p, to 190.4p after it confirmed media reports that it is mulling the sale of its aerostructures business, which is the company’s largest division and makes aeroplane parts. 

It told the stock market it has been ‘reviewing all strategic options’ for the aerostructures arm – but stressed it is at an early stage and that a sale might not happen.

Stock Watch – Deepmatter Group 

Deepmatter Group surged after announcing it will work with Astrazeneca to help speed up the development of new medicines.

The pharmaceuticals group will use the Scottish technology firm’s Digital Glassware platform for drug experiments.

The platform uses artificial intelligence and allows chemists to share the details of their experiments with other scientists in real time.

Shares in AIM-listed Deepmatter jumped 29.27 per cent, or 0.6p, to 2.65p.  

The news has not been a surprise for many in the City, which comes a month after Senior kicked off a £20million restructuring programme to combat the business’s weak performance.

Elsewhere, Kier Group advanced after reports that Terra Firma Capital Partners, run by private equity tycoon Guy Hands, is one of the final bidders for its house building division, called Kier Living.

Kier shares rose 1.2 per cent, or 1.05p, to 85.55p. Shares in funeral services provider Dignity lost as much as 5 per cent after it set December 27 as the date for non-executive director Mary McNamara to step down from the board.

McNamara announced in September she was looking to leave because she was spread too thinly over multiple board commitments.

But the departure of an experienced director comes at a tricky time for Dignity, which is in the process of restructuring.

Dignity shares recouped many of the day’s losses, closing down 0.3 per cent, or 2p, to 590p.

The FTSE 100 lost 0.1 per cent by the close, finishing 5.76 points lower, at 7233.9, and the FTSE 250 also edged lower by 0.05 per cent, or 10.39 points, to 20922.64, in a subdued start to the week.

The value of the pound, however, rose to 31-month high against the euro at €1.188 amid confidence from traders that the Conservative Party can secure a working majority in Thursday’s election.

Attention on the FTSE 250 was focused on Tullow Oil, which was the biggest mid-cap faller after its chief executive left, it downgraded its production forecast, suspended the only recently reintroduced dividend and kicked off a review of its operations.

The explorer’s shares absolutely tanked yesterday, falling 71.75 per cent, or 101.46p, to 39.94p as it went into full crisis mode.

But it dragged a number of other companies into the red with it.

Shares fell 14.6 per cent, or 7.5p, to 44p in AIM-listed Eco Atlantic, which is one of Tullow’s exploration partners for oil off the coast of Guyana. 

And Kosmos Energy, which works with Tullow in Ghana, shed 20.7 per cent of its value, or 97.25p, to 373p.

And entertainment group Cineworld fell 1 per cent, or 2.2p, to 212.8p as UBS analysts trimmed the target price it has set for the cinema chain from 345p to 325p.

UBS brokers kept a ‘buy’ rating on its shares, saying a poor showing at the box office has partly been offset by the prospect of more savings between Cineworld and Regal, the US group it bought for £2.4billion last year, as they merge.

 

 

 

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