Marks and Spencer: what the analysts say

The City has given a broad welcome to Marks & Spencer's Christmas trading statement this morning , which showed that December's snow did not knock the company off track. Philip Dorgan, analyst at Altium Securities These numbers show that M&S can cope extremely well with difficult trading conditions and we believe that the current share price is underestimating the long term potential to cross-sell, extend the brand and to expand overseas. We like the new chief executive's plan – even if the market doesn't – but it is clearly all about implementation, as ever. Successive chief executives have talked a good game, but have failed to translate fine talk into sustained profit growth. We remain buyers with a target price of 550p. Freddie George, retail analyst at Seymour Pierce The Q3 trading statement to 1 January was better than expected and the company encouragingly states that existing guidance on profits for the 2010/11 remains unchanged. [Chief executive] Marc Bolland's proposed shake-up of the company has not been a "damp squib". It will be more revolutionary rather than evolutionary and the market will come to appreciate this over the next 12 months. We reiterate our buy recommendation and believe that the Bolland strategy will lead to further upside to earnings toward the £1bn level over the next three years. Matthew McEachran, analyst at Singer Capital Markets Even after adjustment, sales are better than many others and only represent a small slowdown from the previous quarter. We expect the business to have suffered slightly greater mark-down in the sales than otherwise would have been the case. However, with the numbers potentially having been light in the run up to the snow, we believe forecasts will remain broadly unchanged and management indicate that existing full-year guidance remains unchanged. Richard Hunter, head of UK equities at Hargreaves Lansdown M&S has clearly been playing to its strengths during a time when rivals have been highlighting the difficult trading environment. The company's perceived provision of quality clothing and food has worked well in the period, with the latter in particular enjoying a record day just prior to Christmas. The mantra of the effect of the weather was repeated by management, but this headwind was partially offset by an increase in sales and indeed market share across its key ranges. There is little question that the remaining three months of its financial year will provide further challenges – tougher comparatives, the impact of the VAT increase, the increasingly difficult consumer environment and higher input costs. Even so, the business continues to plot its way through a difficult course and whilst the update is not stunning, it is progressive. The performance of the shares has tended to reflect the general uncertainty, as the shares have lost 7% over the last three months (versus a wider FTSE 100 gain of 5%), yet gained 10% over the last six months (FTSE 100 up 16%). On balance, the market consensus is edging more towards positive territory, with the shares currently coming in as a strong hold.