Marks and Spencer’s (LSE: MKS) share price revival is no longer a hopeful storyline but a palpable reality. But I think it will go a lot higher, as its price converges with its ‘fair value’ over time.

Both Food and Clothing are delivering consistent growth, margins are improving, and the business looks structurally stronger than it has in years.

Positively as well, the sharper focus on value, quality, and operatinal efficiency makes this turnaround look durable rather than cyclical.

So how high do I think the shares will go?

Earnings growth momentum

Earnings growth powers any company’s share price (and dividends) over the long term.

A risk to Marks and Spencer is any lingering weakness in its cybersecurity systems following the attack announced on 22 April last year. As a result, management estimated around £300m would be knocked off its fiscal year 2025/26 operating profit.

Despite this, the underlying engines of the business are moving in the right direction, in my view. Its H1 2025 results saw the Food division continue to outperform the wider market.

Sales jumped 7.8% year on year, marking three years of consecutive monthly volume growth.

This signals to me that Marks is winning shoppers on quality, value and innovation rather than just pricing.

In Clothing & Home, the recovery is slower but unmistakably underway. Availability rebounded quickly, as did online traffic, and the new ranges are popular, helped by stronger style credentials and better stock flow.

Added to this are the ongoing store‑renewal programme, the £340m investment in a modernised Food supply chain, and a multi-year push to automate logistics and reduce cost‑to‑serve. Taken together, these initiatives make the medium-term earnings picture look meaningfully stronger than the headline H1 numbers suggest.

In fact, consensus analysts’ estimates are that Marks’ earnings will rise by a whopping average of 34% a year to end-2028. This is a remarkable trajectory for a business once written off as ex-growth.

What’s the true worth of the stock?

I ran a discounted cash flow (DCF) analysis to ascertain the true worth of the shares. This projects future cash flows from the underlying business and discounts them back to today. It also reflects consensus analysts’ earnings growth forecasts for the company.

The DCF model is my preferred valuation method, as it produces a clean, standalone result, unaffected by over- or undervaluations across a business sector.

Some analysts’ DCF modelling is more bearish than mine, and some more bullish, depending on the inputs used. However, based on my DCF assumptions — including an 8% discount rate — Marks’ shares are 54% undervalued at their current £4.04 price.

Therefore, its fair value could secretly be close to £8.78 a share — more than double where the stock trades now.

This gap is extremely important for long-term investor profits, as asset prices tend to trade to their fair value over time. So this suggests a potentially superb buying opportunity to consider today if these forecasts prove accurate.

My investment view

The combination of rising earnings power, stronger trading and a still‑modest valuation makes Marks and Spencer especially attractive to me. So I will keep my holding in the stock.

And I strongly believe the shares will continue converging toward their long-term fair value. Consequently, I think the shares worthy of other investors’ consideration.