Companies: MKS   

Numis’s retail analyst, Nick Coulter, has pounded the pavements this month to bring back updates on a beleaguered sector, including one on sector bellwether Marks & Spencer, which has suffered margin pressure and warned that like-for-like sales were worse than expected.

‘Marks is looking increasingly poorly positioned’ in both food and clothing, says Coulter, who still urges clients to hold the shares, despite clipping his forecast earnings estimates to 32.7p this year and 29.4p for 2010.

Coulter espies ‘genuine recovery potential’ at confectioner Thorntons, stressing that ‘we do not buy the argument that Thorntons should be valued as a food retailer – chocolate is almost as discretionary as spending comes’. Following recent share price weakness, he upgrades his recommendation from reduce to hold.

Good forecast for fashion
He views home shopping groups N Brown and Findel as, respectively, a buy and a hold. The former has seen its existing customers provide good recent trading and the broker foresees earnings upgrades ‘if present trends persist’. Findel, after providing reassurance on the issues of bad debts and current sales run rates, has had its forecasts trimmed, although Numis’s 450p price target is well above the current 183p market price.

Finally, spreading his search online, Coulter likes the look of fashionable ASOS, upgrading his forecasts and seeing ‘considerable upside’, despite recent more cautious guidance from the company.

Marks & Spencer Group	LSE	£3220.37m	204.25p	-2.25p
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