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(Sharecast News) - Analysts at Berenberg lifted their price target on Next from 18,000p to 18,700p on Thursday, as they said the retailer's latest trading update reinforced momentum across its brand portfolio and fastgrowing international operations.
Berenberg, which stood by its 'buy' rating on the stock, highlighted Next's strong track record of upgrades and said M&A activity and newly unlocked international online growth potential remained key drivers of further upside. It cautioned that yearonyear weather comparisons in September could affect early autumn trading, following two unusually cool Septembers in 2024 and 2025.
The German bank pointed to the growing contribution from Next's portfolio of more than 40 nonNext brands, many of which now benefit from full access to the group's sourcing, logistics, marketing and credit infrastructure. Wholly owned names such as Made, Russell & Bromley and Bhoem helped drive 13.2% LABEL growth in Q2, while equitystake brands including Reiss, Joules and FatFace supported a 10m uplift in fullyear profit guidance from investments.
Berenberg noted another beat and upgrade in the Q2 update, with fullprice sales up 9.2%, ahead of the 5.6% consensus. International sales surged 36.9% in the quarter and 23.9% in H1, helped by a largerthanplanned increase in marketing spend, while UK online Nextbrand sales were down 1.2% against a tough prioryear base. Fullyear profit guidance was raised by around 2%, prompting Berenberg to lift its earnings per share forecast by a similar amount.
It also said Next's share price remained too high for buybacks under its capitalreturn framework, which requires pre-tax profits as a percentage of market cap to exceed 8%. For now, Berenberg assumes the planned 524m return will be delivered entirely through buybacks.
Reporting by Iain Gilbert at Sharecast.com
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