Next PLC (LSE:NXT) reported sales growth of 4.8% for November and December, “comfortably ahead” of Barclays’ forecasts, said the bank.
Barclays suggested a target price of 7,000p for Next, up from current value of 6,534p, adding the retailer was rated as ‘neutral’.
FTSE100 listed Next upgraded its full-year guidance when reporting results on Thursday, now suggesting profit before tax will sit £20mln higher than original predictions, at £860mln.
Barclays added Next’s update marked “a positive trading statement,” despite the retailer’s warnings that full price sales and pre-tax profit will likely fall by 1.5% and 7.6% respectively in 2024.
The bank commented this warning came as a “welcome visibility in a time of numerous headwinds,” adding the 2024 guidance was broadly in line with its own predictions.
“Overall, we think this is a positive statement given the strong sales growth at the end of 2022,” said Barclays analysts, who suggested Next had been overly cautious with its 2022 guidance, but was not in its most recent outlook.
Barclays also reiterated Next’s view that cost pressures seemed to be easing, driven by falling commodity prices, increasing factory capacities and new supply lines.
Credit Suisse, downgraded Next from a ‘neutral’ to an ‘underperform’ rating following its trading statement.
It did raise the groups target price, though, from 5,200p to 6,100p.