UK shares might be considered cheap today, at least in comparison to prices in the US stock market. On a forward price-to-earnings basis, the FTSE 350 is valued on a multiple of only 13, while the S&P 500 is on ratio of almost 21.
With this in mind, let’s take a look at which shares analysts have been upgrading in the FTSE 350. There might be value here for my portfolio.
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The first UK share
Analysts have been upgrading Watches of Switzerland (LSE: WOSG) over the past month. In fact, the target share price for the company has risen 22% over this period. Clearly, things must be going right for the firm to attract such a big upgrade.
This UK share released a second-quarter trading update in November. It said the first-half performance has been better than expected. Revenue grew a huge 44.6%, and full-year guidance was boosted. A US expansion strategy is also under way with acquisitions of five stores agreed.
I can see why analysts have been upgrading the share price. There’s still a risk here as the firm sells luxury jewellery and watches, so sales might fall next year if the economy stalls. Nevertheless, I’m considering buying this stock.
Upgraded after a takeover
The second-most upgraded UK share over one month is Playtech (LSE: PTEC). The target price has risen by 17% over one month.
I previously wrote about this share here. As a quick recap, the company was the subject of a takeover bid from Australian slot machine manufacturer Aristocrat Leisure. The bid for Playtech was 680p, but the share price was trading above this bid price. This normally indicates a potential competing bid to come.
Well, almost two weeks later, Playtech revealed that it received additional interest from JKO Play. The share price is now 750p at time of writing.
On reflection, I have no interest in buying this UK share as I consider trying to front-run a competing bid a risky strategy. There’s also no guarantee JKO will bid higher for the shares. I’ll let Aristocrat Leisure and JKO Play battle it out.
One more UK share to consider
Finally, Marks and Spencer (LSE: MKS) has had its share price target increased by 17% this past month. The stock is up a huge 82% this year, so maybe analysts were catching up with their own share price targets after this stellar rally.
Marks and Spencer released its half-year results this month, and they looked good. Profit before tax was £187.3m, which was higher than the £158.8m the company achieved two years ago prior to Covid. Last year, MKS only managed a loss before tax of £87.6m, so this is a huge turnaround. I understand why analysts have been upgrading the target price for the company.
Commentary from the CEO was somewhat underwhelming though. Supply chain headwinds and Brexit impacts are expected to continue into next year. The forward P/E is 12 which I think correctly values this UK share. I’m keeping it on my watchlist for now.