Marks and Spencer Group Plc : Persistent bid rumours

09/11/2012 | 03:54am Opinion : Bullish above 350 GBp Target price : 425 GBp Stop loss: 340 GBp

LONDON STOCK EXCHANGE Retail – Department Stores

Mark & Spencer yesterday rose on the bid rumors, which see the company as the object of leverage buy out by some private equity. For many days the market bet on this purchase. Banks, approached by private equity buyers interested in the deal, have estimated that the buyout would need around 4 billion pounds of debt.

In May the company has recorded its first drop in annual profits for the last three year. Since this date analysts polled by Thomson Reuters are less confident on the results for the next two years.

The share rose 18% from bottom level reached in July. Speculation boost the share, which now is in bullish trend supported by moving averages. In weekly data, since 2011 the share is trading in a neutral range between GBp 307 / 383. We advise attention on the confirmation of rumors. However we suggest a long position in order to surf the wave of speculation, and also because we think, at current price the share is not overvalued. The denied of the rumors shouldn’t improve the bearish trend.

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