Citi Turns Bullish on Next, Sticks with Buy on M&S as UK Retail Momentum Builds

Citi upgraded Next (LON: NXT) to “Buy” from “Neutral” on Tuesday, lifting its price target to 18,400p from 15,500p, while reiterating a “Buy” rating on Marks & Spencer (LON: MKS) and raising its target from 390p to 470p. Shares in Next climbed 2.49% to 15,655p, while M&S rose 1.90% to 392p following the note.

The upgrade reflects Citi’s growing confidence in Next’s international business, which has delivered a roughly 20% five-year sales CAGR and now accounts for more than a fifth of product revenue.

The bank forecasts a 17% four-year sales CAGR for the division through FY29 and expects a further 10-percentage-point shift in revenue mix toward overseas markets.

With diminishing reliance on the UK market and superior growth prospects, Citi argues Next deserves a re-rating above its long-term average multiple of around 14x, as investors increasingly benchmark it against global fashion peers such as Inditex. Citi also lifted its FY27 adjusted pre-tax profit estimate for Next by 3%.

On M&S, Citi pointed to structural tailwinds across both Food and Clothing. Worldpanel data suggests M&S’s food arm could post double-digit sales growth in the first half of 2026, with Citi pencilling in 13.1%.

The retailer’s new Lichfield distribution centre is also expected to unlock meaningful margin benefits from FY29 onward, bolstering group profitability and supporting the turnaround narrative that has underpinned the stock’s re-rating over recent years.

Together, the calls underscore Citi’s broader optimism toward UK retail names navigating structural change through international growth and supply-chain investment.