Next plc Can ‘Thrive’ In Difficult Times – Stifel

It’s been a challenging year for retail stocks, and Next plc (LON: NXT) is no different, with its share price down over 31% in 2022.

Of course, inflation has been a significant issue, and while in the UK, it eased slightly in the latest reading, we can’t yet assume the macroeconomic headwinds are on the way out.

WELCOME BONUS - Free Share Bundle When You Invest £50! Get up to £500 cashback for investing with IG.

Invest in 15,000+ shares and ETFs. Open an account now, invest at least £50, and you’ll get a free share bundle worth between £40 and £200. T&Cs apply.

5.0

Open Account Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Even so, Next was upgraded to Buy from Hold at Stifel on Friday by analyst Caroline Gulliver.

The analyst maintained the firm’s price target on the stock at 6,500p in a note to clients, stating that the Next share price has declined significantly this year, UK consumer confidence is still close to record lows, and she sees declines in discretionary income in 2023. However, Gulliver believes Next “can thrive in these difficult times” given its multi-channel, multi-brand offering, and discipline.

Next shares are up 1.2% at the time of writing on Friday.

Elsewhere, a the start of December, Morgan Stanley analyst Grace Smalley assumed coverage of Next with an Equal Weight rating and a 5,575p price target.

Smalley noted that pressures and cost headwinds are “colliding,” creating a “perfect storm” for apparel retail. The analyst said in here research memo that she has assumed coverage of the sector with a “cautious view,” especially on clothing retail due to pressures on disposable incomes.

According to the analyst rating website TipRanks, out of 10 analysts, four have a Buy rating on Next shares, with six assigning the stock a Hold rating. The average price target between those analysts is 5,875p, representing a potential 3% upside.