Clothing retailer Next Plc (LON:NXT) saw its recent post-results rally curtailed today by a downgrade in rating from French broker Exane BNP Paribas.
In a note on the UK general retail sector, Exane cut its stance on the FTSE 100-listed firm back to ‘underperform’ from ‘neutral’ and reduced its target price by 5% to 3,700p after the recent “bounce”.
In mid morning trading, Next shares were down nearly 2%, or 85p at 4,235p.
In its sector review, entiled ‘Cash is King’, the broker’s analysts said: “The ‘core’ UK retailers, M&S, Next, Kingfisher and Dixons Carphone, are all perceived to be reaching a level of maturity.
“Store roll-outs have either been cancelled, been reversed or are being viewed with scepticism. Market share losses are either ongoing or expected.”
They added: “Absent a consumer recovery or radical strategic plan, interest in these mature and challenged assets is likely to be confined to value and cash focussed investors.
“We expect momentum to continue to be the key determinant of share price performance.”
Dixons preferred; Kingfisher fears ...
The analysts said that with “interesting catalysts, greater sustainability and more optionality” they continue to prefer electricals retailer Dixons Carphone PLC (LON:DC.) and “fear most” for B&Q DIY chain owner Kingfisher PLC (LON:KGF).
Exane repeated an ‘outperform’ rating on Dixons Carphone, albeit with an 8% cut in its price target to 355p. Dixons shares shed 1.8%, or 5.7p at 311.9p.
The broker reiterated its ‘underperform’ rating on Kingfisher with a reduced target price of 260p, down 17%. Kingfisher shares lost 0.6%, or 2.1p at 324.0p.
It also maintained an ‘underperform’ rating on Marks & Spencer PLC (LON:MKS) but raised its target price by 26% to 315p. M&S shares were still 0.5%, or 1.6p lower at 335.4p.