No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(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.
RBC Capital Markets suggested on Thursday that takeover approaches by private equity firms CVC and Veritas Capital for Bodycote were "not very generous", as it lifted its price target on the stock.
Bodycote surged late on Wednesday after it emerged that CVC and Veritas had made offers at 915p a share and 914p a share, respectively. Both would include the interim dividend of 7.2p a share.
RBC noted that it has previously argued that bids for Dowlais and recently Rotork have undervalued quality industrial assets that have been harshly de-rated in the UK market.
"The premium here is not that generous at 21% to the close the day before the announcement and only 16% above the year-to-date peak pre M&A interest," it said. "The implied EV/EBITA at 14x26E/ 12x27E does not look compelling in our view relative to the 10-year average for Bodycote at 13x and strikes us as another example of a bid taking advantage of a derated UK industrial," RBC said, referring to Rotork.
The Canadian bank, which rates the stock at 'sector perform', lifted its price target on Bodycote to 950p from 750p given the potential for competing offers.
"Given two potential bids following a prior discussion in May with another bidder, we see M&A as a solid underpin now," RBC said. "However, as noted above the valuation does not look that generous on a take-out basis.
"We are not sure there is a natural trade buyer, potentially leaving this as a PE contest, but we do see valuation upside from the current bid level and raise our PT to 950p, which would still only be 13x27E EBITA, in line with the 10-year average."