Aviva and M&S shares tipped to go even higher

Aviva Canada’s head office in Markham, Ontario. Credit: JHVEPhoto/iStock.

Improved Marks & Spencer Group (LSE:MKS) and Aviva (LSE:AV.) price targets have been disclosed by a City bank after it flagged the retailer’s margin upside and said the insurer was at a “compelling entry point”.

The upgrades point to advances of about 13% over today’s prices as UBS analysts lifted their value estimate of M&S shares by 40p to 465p and Aviva by 60p to 780p.

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The support comes as Aviva prepares to deliver a City briefing on its Wealth division on Friday before third-quarter results on 13 November, while M&S is scheduled to post interim results on 4 November ahead of a capital markets day (CMD) on 10 November.

UBS expects this week’s update by Aviva to lead to modest upgrades to existing earnings targets in the Wealth operation, which spans pensions, savings and investments.

Together with synergies from the recent Direct Line acquisition, the bank sees the group’s 2028 earnings per share figure hitting 78p compared with the company’s target of 75p.

This is despite about 55% of earnings currently being exposed to industry headwinds, principally in UK home and commercial. A further 35% of earnings are boosted by tailwinds, including UK motor insurance and Canada personal lines.

UBS pointed out that Aviva’s targeted 11% compound growth rate in earnings up to 2028 compared with the 7-9% of large-cap European insurers AXA SA (EURONEXT:CS), Allianz SE (XETRA:ALV) and Zurich Insurance Group AG (SIX:ZURN).

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It said the outlook underpinned an “attractive” medium-term total shareholder return of more than 17% per annum, including the 6% dividend yield.

A fall from August’s 737p means the shares are now on about nine times forecast 2028 earnings, compared with 8.5-12 times for Aviva’s European large insurance peer group.

UBS said this pullback had “created a more compelling entry point”, adding that its expectation for an increase in share buybacks from £350 million to £400 million in 2028 contributed to an all-in yield of 8.8%. This compares with 6.5% for the other big insurers.

The improved Marks & Spencer price target reflects the bank’s optimism on the outlook for the online margin within the fashion, home and beauty (FHB) division.

It expects self-help levers and simplification of the e-commerce network to drive an improvement to 10.7% by 2029, which in turn lifts the overall FHB figure to 12.5% compared with the City’s current forecast of 11.4%.

UBS believes the market is disproportionately focused on near-term FHB weakness amid the after-effects of last year’s cyber attack.

The bank said: “With the autumn/winter season potentially showing some consistency, the market will likely refocus on the medium-term controllable levers in FHB, which Marks will likely explain better at the CMD on 10 November.”

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UBS expects next month’s half-year profits to be £388 million, which would be a robust recovery from last year’s £184.1 million but still be short of the £413.1 million seen two years ago.

The shares are back where they were in early August at 410p, having rallied from May’s 309p and then fallen back to 355p by mid-September. There were 170p in October 2022 and 233p after the cyber attack in April 2025.

UBS points out that M&S currently trades at about 11.5 times its next 12 months’ earnings, compared with its pre-cyber attack peak of 14 times. The bank said this implied meaningful upside if the company shows consistency, especially in FHB.