Next PLC (LON:NXT) extended its gains on Friday following Thursday’s reassuring Christmas trading update as Berenberg upgraded its rating for the high street store group to 'hold' from 'sell'.
The FTSE 100 retailer trimmed its full-year 2018/2019 profit guidance to £723mln, down from £727mln previously, but posted a 1.5% jump in sales over the key Christmas period.
READ: Next shares jump on well-received Christmas trading update
In a note to clients, the German broker’s analysts said: “The year ahead for Next is difficult to predict, with upside risk following an annus horribilis for UK retail, but downside risk from continued Brexit uncertainty and the ongoing structural shift of sales online.”
As a result, they added, they think Next’s guidance for sales growth of 1.7% and a 1% decline in pre-tax profit for full-year 2019/2020 is “reasonable”.
In the near term, Berenberg’s analysts said they believe that Next's third-party products business will continue to benefit from the demise of department store peers.
Meanwhile, in the longer term, they expect that another year of poor store like-for-like growth will provide further support for its view that a store estate restructuring is required, paired with a shift to free home delivery.
The analysts cut their full-year 2019/2020 earnings per share forecasts for Next by 1%-2% but retained a 4,100p price target on the stock.
In afternoon trading on Friday, following a 4% share price jump on Thursday, Next shares were another 1.2% higher at 4,403p.