Marks and Spencer (LSE: MKS) shares have had a very good run just lately. Over the past yr, they’ve risen greater than 50%.

One dealer reckons they will go a lot larger although. It believes we may probably see double-digit share value positive aspects from right here.

Dealer improve

The dealer I’m speaking about is JP Morgan.

In a analysis observe posted final Thursday (12 April), it upgraded the shares from a ‘impartial’ stance to an ‘obese’ (purchase) score.

It additionally put a 330p value goal on the inventory, which is about 29% larger than the present share value.

The dealer listed a number of causes for the improve together with:

• Marks and Spencer’s latest market share positive aspects in clothes.
• Low expectations from traders.
• The corporate’s low valuation.

It’s value noting that that is the primary time since 2015 that JP Morgan has had an obese score on the shares.

Marks and Spencer has demonstrated the most important constructive inflection in market share popping out of the pandemic. Mixed with extra to go for in males’s and kidswear, together with compelling gross sales uplifts from retailer renewals, we see latest positive aspects as sustainable.

JP Morgan

My take

For my part, this improve, and the brand new share value goal, make a number of sense.

I’ve stated earlier than that Marks and Spencer has been doing nice issues within the clothes house just lately. I feel it’s actually beginning to get this facet of the enterprise proper.

In the meantime, the present valuation does appear very low. With analysts anticipating the corporate to generate earnings per share of 25p this monetary yr (ending 31 March 2025), the forward-looking price-to-earnings (P/E) ratio is simply about 10.2.

Provided that earnings forecast, the P/E ratio would solely should rise to round 13.2 for the inventory to hit JP Morgan’s value goal of 330p. To my thoughts, that earnings a number of may be very achievable – it’s under the market common.

Wanting forward, one issue that might probably assist the share value rise is a rise in dividends. This monetary yr, the payout is forecast to rise 82% to six.2p per share (a yield of about 2.4% at as we speak’s share value).

This improve within the payout may entice these in search of each positive aspects and earnings.

Dangers

In fact, the massive danger here’s a downturn in client spending. Whereas final yr’s recession seems to be over, the UK might not be utterly out of the woods but from an financial perspective.

That stated, Marks and Spencer does are likely to serve an older, extra prosperous crowd. This might present some insulation from future financial weak spot.

Engaging funding alternative?

In gentle of the latest improve from JP Morgan, I imagine traders ought to think about shopping for Marks and Spencer shares as we speak.

The corporate is performing properly proper now and the inventory is sort of low-cost.