Shore Capital analyst Clive Black has welcomed speculation in the media and the City that private equity firm CVC could bid for Marks & Spencer.

Black said the speculation has been fuelling a strong share price for M&S and recommended buying the shares.

Bloomberg reported on Friday that CVC has explored taking M&S private and could lodge a bid for the retailer.

Black said that, despite struggling in womenswear, M&S is performing well in food, chidrenswear and menswear and is making gains in online retail.

He said: “In response to the recent corporate activity stories we have stated that whilst we do not know if anything will emerge, if it did then M&S should command a material premium to the present share price.

“M&S is a highly prized and leading brand in UK retailing with a strong international resonance and potential. The group has a strong balance sheet with commendable fixed assets and manageable solvency ratios that should materially improve once the investment is complete; those future cash flows should not be overlooked by shareholders.”

M&S is to open its flagship store in Cheshire Oaks tomorrow. The 148,000 sq ft store will be its second largest store behind Marble Arch in London.  

The Shore Capital analyst was less positive about Morrisons. In a note issued today he recommended shareholders sell their shares ahead of an expected gloomy first half update next Thursday.

Black said performance at Morrisons is likely to have been impacted by poor trading conditions and disruption to stores through the conversion process to its Fresh Format design.

He added: “Morrison has been particularly adversely impacted by the successful acquitition and subsequent conversion by Asda of Netto stores.”