Marks and Spencer (LSE: MKS) shares have performed well in 2026. Year to date, they’re up about 16%, which is more than twice the return of the FTSE 100 index.
Can they keep climbing? Let’s take a look at City analysts’ forecasts to see what the experts think.
Tipped to rise from here
At present, the average 12-month price target for Marks and Spencer shares is 431.5p, according to my data provider. That’s around 12% above the current share price.
If that price target was to be hit over the next 12 months, a £5,000 investment today could grow to £5,600 and that’s before dividend payments. The dividend yield’s around 2%, so that could add another £100, or so.
Is that forecast achievable?
Is that consensus price target realistic? I think so. For the financial year commencing 1 April 2027, the food and fashion retailer’s expected to generate earnings of 35.7p per share. So, a share price of 431.5p would equate to a price-to-earnings (P/E) ratio of 11.5.
That isn’t a high valuation. Especially when you consider that earnings growth next financial year’s expected to be around 8%.
I can definitely see the scope for that kind of earnings multiple in 2027. Comparing the P/E ratio with the earnings growth rate, we get a price-to-earnings-to-growth (PEG) ratio of 1.4, which again, isn’t high.
My assumptions
Of course, relying on that earnings forecast above involves making a number of assumptions. One is that consumer demand remains robust. There’s the risk that it could weaken. That said, M&S typically serves more affluent consumers and this demographic tends to have more spending power.
Another assumption is that the company’s costs don’t blow out. It’s worth pointing out here that the company’s planning to spend more on refrigeration as its fridges struggled to cope with June’s heatwave.
Higher oil prices are also potentially a risk on the cost front. They could increase transportation and energy costs.
Of course, I’m also assuming that there are no more cyberattacks. The attack last year was an absolute disaster and it had a big negative impact on both the company’s earnings and its share price.
Are the shares worth a look today?
Is there an opportunity to consider here then? I say there is – in my view, the shares have the potential to provide attractive returns in the years ahead.
It’s worth noting that the company said earlier this month that it has plans to return more cash to shareholders in the coming years. In other words, we could see higher dividends and/or increased share buybacks.
It seems analysts share my bullish view. Of the 18 firms covering the shares today, 16 see them as either a Buy or Strong Buy.
I’ll point out however, that there are plenty of other great opportunities in the market to consider right now. Marks and Spencer certainly isn’t the only UK stock that looks attractive.
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Edward Sheldon does not hold any positions in the companies mentioned
