Next PLC’s (LON:NXT) valuation has now caught up with events, according to analysts at Liberum, who on Wednesday downgraded the stock to ‘hold’ from ‘buy’ but upped their target price to 7,000p from 6,500p.
The broker noted that shares in the FTSE 100 clothing retailer have risen by 64% since their last upgrade in January, following what it said was a “very credible run” of results for the group, which so far this year has mostly been defying the gloom facing Britain’s high street by using its online operation to offset a sales decline in its brick-and-mortar store estate.
Analysts said the higher target price reflected “some potential Brexit relief and our view that Next is well placed to outperform next year as profit drag from the switch to online from stores is now positive”.
Liberum added that the pattern of trading in Next’s third-quarter update, which showed strong trading in July and October offsetting weather-induced weakness in September, would provide “useful insight” for other clothing sellers such as Superdry PLC (LON:SDRY), Ted Baker plc (LON:TED) and Joules Group PLC (LON:JOUL).
In late-morning trading, Next’s shares were 2.7% lower at 6,668p.