Looking at Marks and Spencer (LSE: MKS) shares in the wake of the Easter weekend cyberattack, one remarkable thing strikes me.
Online shopping was disrupted and has only just resumed today (10 June), though for a limited range of products. Full service could still take another few weeks. The attack will probably hit profits by around £300m for the 2025-26 year, but insurance should cover some of it.
What’s the key thing that struck me? It’s the M&S share price resilience. It dipped a bit in the weeks following the turmoil, but not much. It’s already bounced part-way back and is up 20% in the past 12 months. We’re looking at a five-year gain of 230%.
Next 12 months
Investor sentiment is strong with this one. But even after the past few storming years, the valuation doesn’t look that high and I see a good chance of more to come. City analysts seem to think so too.
Forecasts for the 2025-26 year put the price-to-earnings (P/E) ratio at a bit over 14. We also see a PEG ratio of a very low 0.2. That compares the P/E with the expected earnings growth rate, and lower is better. Growth investors typically see anything under 1 as worthy of closer attention. And a PEG below 0.7 can get them quite excited.
These forecasts will amost certainly be revised when we know the extent of the cyberattack damage. And M&S shares might not look quite such good value.
Further forward
But it seems unlikely at this stage that it’ll have any effect on profits for the 2026-27 year. And the forecasts there look even better.
If they’re right, earnings growth could knock the P/E down under 11. And for that year, we could see a PEG of 0.3.
So a year from now, we might be sat here looking at a similar rosy outlook for the following 12 months. But with an even more attractive valuation… if the share price doesn’t rise by then, that is.
Share price
Where do the pundits see the share price going? With a fairly strong Buy consensus, the average price target is around 410p. That’s 13% ahead of the price of the time of writing. And it could turn £10,000 into £11,300.
And based on earnings forecasts for 2026-27, a year from now we could still see a forward P/E of only a bit over 12 — even if the M&S share price hits that target.
The upper end of the price target range, at 460p, would get that forward P/E next year close to 14, which is about where it is now. That’s a 24% share price rise from today. And it could turn our £10,000 into £12,400.
Risk vs reward
We’re definitely still looking at some short-term risk here as M&S emerges from the cyberattack. And we mustn’t forget that the UK retail sector still faces pressure from economic weakness, interest rates, and intense price competition.
But I do think I’m seeing undervaluation here, and investors could do well to consider Marks and Spencer.
