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Like many of Britain’s grocers, the Marks and Spencer (LSE:MKS) share price is off to a rocky start in 2025. Fear of a new pricing war with Asda sparked an industry-wide sell-off. And yet, when zooming out, this recent drop hasn’t put much of a dent in the stock’s medium-term performance.
Since Stuart Machin took the reins of leadership in May 2022, the fashion-to-food chain has been on a pretty solid run. In fact, its market-cap is up over 160% in just shy of three years. And despite recent turmoil, analyst forecasts remain bullish.
So what are the experts predicting for the Marks and Spencer share price in 2025?
Prediction: growth will continue
Despite shoppers largely looking for discounts and deals right now, there remains some appetite to splurge on occasion. Rivals like Tesco and Aldi both saw a notable uplift in demand for their premium ranges of products over the Christmas holidays. And M&S’s premium offer was no exception.
Its winter trading results revealed an 8.9% jump in like-for-like sales for its food products, and even demand for fashion increased with a better-than-expected 1.9% jump.
Sadly, management’s outlook didn’t ignite much confidence. It cited uncertainty regarding the economic climate and an incoming increase in tax expenses thanks to the boost in employer Nation Insurance contributions. Combined with this, caused shares to take a small tumble in early January.
However, it seems analysts haven’t been too discouraged with forecasts for 2025 and 2026, which are still promising growth. Sales are expected to reach as high as £14.6bn by 2026, paired with a potential 42% gain in earnings per share. Subsequently, 14 of 17 analysts currently have Marks and Spencer rated at a Buy or Outperform with an average 12-month share price forecast of 447.5p.
At this price point, it suggests the retailer is currently undervalued by roughly 25% right now.
What could go wrong?
Locking in a 25% gain in just 12 months is undeniably exciting. After all, the FTSE 100 only usually manages around 8% a year. But as alluring as this sounds, it’s important to remember that forecasts aren’t set in stone. Marks and Spencer operates in a fiercely competitive industry. And while the firm tends to cater to a niche and wealthier audience versus most supermarkets, it still has rivals like Waitrose to worry about.
Tesco has also started encroaching on its territory in recent years, with its Finest range luring M&S customers away with cheaper premium offerings. Should this trend continue, sales and earnings forecasts could fall short of expectations.
All things considered, Machin seems to be making the right moves, especially considering the stock recently hit its highest point since 2016. I think investors should brace for more short-term volatility while the impact of economic uncertainty persists. But in the long run, the business appears to be in good hands. That’s why Marks and Spencer may be worth a closer look now that its share price has taken a tumble.
