Nomura upgrades Next to 'buy', lifts price target
Nomura upgraded clothing retailer Next to ‘buy’ from ‘neutral’ and lifted the price target to 8,000p from 7,600p.
FTSE 100
8,075.71
16:34 25/04/24
FTSE 350
4,432.51
16:30 25/04/24
FTSE All-Share
4,386.10
16:34 25/04/24
General Retailers
3,906.74
16:24 25/04/24
Next
9,128.00p
16:34 25/04/24
The Japanese broker said Next has multiple opportunities to grow: market share gain in the UK from stores, homewares and online development; wallet-share growth through targeting the branded spend of existing customers; and the growth of overseas online to attract new customers.
It said that while Next was a young fashion brand 30 years ago, many of its customers are now reaching their 50s, putting the business into increasing competition for this demographic with Marks & Spencer.
Nomura said Kantar data suggests Next is a large share gainer in M&S core products such as knitwear and trousers, adding that many of its new large-store projects are in M&S top-50 catchment areas.
The analysts told clients that as the FTSE 100’s top-performing surviving stock over 20 years by a margin of 70%, comparing with other retail stocks may be missing the point. It said the price-to-earnings relative to its forecast of a 9.6% full-year 2017 total shareholder return compares favourably with a quality growth basket.
“Although we do not expect 16% upside over the next 12 months, at our target price the shares would deliver a 13.1% return,” they said.
At 1045 BST, Next shares were up 1.3% at 7,595p.