Citigroup downgraded Marks & Spencer (M&S) to “Neutral” from “Buy” on Thursday, lowering the firm’s price target on the stock to 170p, down from 175p.

A Citi analyst explained that while they continues to view M&S’s transformation positively, they expect the demand environment to deteriorate across 2023 and into 2024.

“We believe the company’s transformation is progressing well, with a clear focus on improving the customer experience and driving efficiency,” the bank said. “However, we believe the demand environment is likely to deteriorate in the coming quarters, as the cost of living crisis weighs on consumer spending.”

The firm also noted that M&S’s share price has outperformed the market in recent months, and they believe the stock is now fairly valued.

M&S’s shares fell over to a low of 159.15p in early trading on Thursday before closing the session at 161.95p, down over 1%.