Panmure Gordon reiterated its 'hold' rating for High Street giant Marks & Spencer on Thursday morning following some weaker-than-expected third-quarter sales.

M&S reported a 0.3% increase in UK Food like-for-like (LFL) sales for the 13 weeks to December 29th 2012, worse than the +1.0% consensus forecast.

Nevertheless, Panmure noted that the 'adjusted' LFL change (which includes New Year's Eve) was +0.9%, "which, we agree with the company, is a better assessment of the underlying performance". As such, the broker said that Food was "fairly decent, especially considering little to no price inflation".

As for the General Merchandise performance, LFLs were weak, down 3.8% against the consensus expected range of -1% to -3.5%.

Panmure said that, overall, the figures are likely to lead to a full-year 1.5-2.0% profit before tax downgrade to £660-665m, compared to the broker's initial estimate of £666.8m.

The broker has slashed its target price for the stock from 397p to 379p "to reflect a greater level of risk to forecasts".

Shares were down 4.7% at 353.58p by 09:15. At 340p, Panmure said that the stock would trade on an attractive 10.7 times earnings (compared with the current 11.7 multiple), which it sees as a buying level.

Seymour Pierce retained its 'hold' recommendation for M&S this morning, cutting its target price from 365p to 350p, while Espirito Santo downgraded the stock to 'sell' and reduced its target from 360p to 310p.

BC

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