Next Has a ‘Significant International Growth Opportunity’ – Goldman Sachs Raises Stock to Buy

Goldman Sachs upgraded UK retailer Next (LON: NXT) from Neutral to Buy on Monday, highlighting the company’s “significant international growth opportunity” and its proven domestic e-commerce platform. 

The investment bank also raised its 12-month price target for the stock to 14,000p, up from 12,200p. Goldman highlighted updated earnings assumptions and a lower weighted average cost of capital (WACC).

Next shares closed Monday’s session 1.5% higher at 11,730p a share.

In the research note, Goldman Sachs described Next as “a compounding growth retailer” with low share price volatility relative to its coverage. They also noted its stable performance amid a challenging macroeconomic environment.

The analysts see meaningful upside from international expansion, noting that Next is building from “an immature current base.”

This is said to underline the potential for the brand to scale globally using its existing digital infrastructure, which has proven successful in the UK market.

A discounted cash flow model underpins Goldman’s valuation and assumes a WACC of 9.7%. This is revised down from 10.7% due to a change in Beta to 0.77 from 0.9. 

“Our PT implies an 18.3x January 2027E P/E,” the analysts said, also mentioning an enterprise value to NOPAT multiple of 18.4x.