Deutsche Bank raised its price target on Next (LSE:NXT), to 16,000p from 14,000p, while keeping a Hold rating, with the stock last closing at 15715p, implying further upside at current levels.
Analyst Adam Cochrane said Next's premium valuation against the rest of the UK retail sector is warranted, pointing to first-half full-price sales growth of 7.7% that accelerated to 9.2% in the second quarter.
Cochrane noted that beating its own guidance has become something investors now expect from the fashion and homeware retailer, but argued that should not obscure the strength of the absolute growth figure relative to peers; he also flagged that the latest upgrade stemmed largely from the international division and improved profit expectations tied to Next's equity investments, both of which diversify the business away from its more mature UK operations.
Cochrane framed that diversification as the key support for Next's premium price-to-earnings multiple against the sector.
