Marks & Spencer (LON: MKS) shares rallied Wednesday, climbing over 4% after Citi analyst Nick Coulter upgraded it to Buy from Neutral, raising the firm’s price target on the stock to 175p from 150p.

The analyst, who also maintained a Sell rating on Next (LON: NXT) and a Neutral rating on Associated British Foods (LON: ABF), said in a note on retailers that they believe the UK’s “household available cashflow (HAC) will start FY23 in positive territory.”

However, don’t get too optimistic just yet — Coulter also said they see it decelerating and falling into negative territory for most of FY24.

“The macro outlook is better than our previous expectations, driven by lower non-discretionary cost inflation,” said Coulter, who cautioned that it is still subdued.

On M&S, the analyst wrote that while the firm’s EPS forecasts do not differ materially from consensus, but they believe its £400m savings program “will enable selective investment in its clothing proposition before acting as an underpin to its outer year margin progression.”

While the research memo was positive for M&S shareholders, Next investors would be forgiven for being less than enthused, with Coulter stating they are less constructive on its shares. Next closed Wednesday’s session down 0.6%.

Meanwhile, Citi believes ABF’s EBIT profile is “well underpinned,” but they view the shares as fairly valued. ABF gained 0.5% Wednesday.

By Sam Boughedda