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Next back in fashion as analysts see positive trends

By FashionUnited

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Merrill Lynch had a simple message to investors about the retailer Next yesterday: buy into the stock ahead of results later this month. In a preview of Next's interim figures, due on 15 September, the US broker hiked its rating to "buy" from "neutral" and set a bullish 1,240p.

Given the problems Next experienced around this time last year Merrill believes the retailer now has a great opportunity to boast of an improving trend, and it reckons the retailer will do just that. On the womenswear front the broker believes Next is in a position to offer significantly better prices than its competitors without diluting margins thanks to a combination of favourable currency movements and a restructured supply chain.

Merrill forecasts a 16 per cent rise in EPS at the upcoming interim stage. The broker was keen to note that should Next shares reach its 1,240p price target they will still trade at a 10 per cent discount to the European retail sector. Next finished the day 13p higher at 1,136p.

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