Next PLC (LSE:NXT) has been downgraded to 'hold' by Shore Capital, after the retailer’s strong share price performance led to a greater valuation premium above peers.
Shares in the FTSE 100 retailer are up nearly 50% year-to-date, closing around £143 after the company issued its fourth upgrade to full-year guidance.
Shore Cap analyst David Hughes raised its fair value estimate for the shares to 14,750p from 14,000p but said the current valuation leaves limited room for upside.
Next recently upgraded its 2026 adjusted profit before tax forecast to £1.135 billion, representing 12% growth year-on-year. Shore Capital has raised its own forecast to £1.141 billion, alongside a revenue projection of £6.7 billion.
While Shore Capital remains positive on Next’s outlook, the shares currently trade on a CY26 forecast price-to-earnings ratio of 18.5x, and the broker sees limited scope for further re-rating.
"We would be happy holders, but for the time being would not recommend investors add to their holdings,” Hughes said.
Looking ahead, he expects growth to come from the company’s Label and Overseas divisions, while the UK Next brand is viewed as mature, with modest revenue growth of 2% expected.
Cash returns remain a key attraction, with total shareholder distributions forecast at £800 million in FY26, equivalent to a 4% yield, including a potential special dividend of £3.10 per share in early 2026.