Berenberg hikes target price on Next
Analysts at Berenberg hiked their target price on retailer from 13,400.0p to 14,700.0p on Friday, citing upside risks to its Q2 estimates.
Berenberg said Next's Q126 trading statement on 8 May brought the second upgrade to adjusted pre-tax profit guidance this year, on the back of four upgrades in each of the past two years. In its view, this "positive momentum" reflects the changing profile of Next and some growth angles that have emerged recently - as opposed to a time-limited self-help recovery, which was "more typical" for legacy retailers.
The German bank noted that Next's 1.3% adjusted pre-tax profit guidance upgrade for FY26E took into account the better performance than it had anticipated in Q1, but said it added nothing beyond its previous guidance for the remainder of the year.
"We see upside risk to our Q2 estimate of 4.9% total full-priced sales growth and to company guidance. Prior-year comparatives do not become more demanding until Q3," said Berenberg, which has a 'buy' rating on the stock.
"Our profit estimates are raised by 1-2% through the DCF, but we also now incorporate a 10% premium for management and the quality and defence profile of Next."
Reporting by Iain Gilbert at Sharecast.com
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