Next PLC share price could jump to 7,080p if it clears this hurdle

Next PLC (LON: NXTL) share price has made a strong recovery in June after the company published strong financial results last week. The stock jumped to a high of 6,908p on Thursday, the highest level since May 12th. In all, the shares have jumped by more than 20% this year, making it one of the best-performing UK retail stocks.

Business is booming

Next delivered an unscheduled trading statement last week. In it, the management noted that the company’s performance was much better than what it guided previously. Its revenue in the first seven weeks of the quarter jumped by 9.3% on a year-on-year basis. In its previous guidance, the company said that its revenue would drop by 5%. 

For the full year, the company said that its revenue would be better by 137 million pounds while its profit would jump to over 835 million pounds. Next attributed this momentum to the relatively warmer weather and annual salary increases in the UK.

Next PLC has done well in a difficult year for the UK. The most recent economic numbers showed that the inflation remained sticky. While the headline inflation eased to 8.7% in May, core inflation has remained stubbornly high in the past few months.

As a result, the UK is expected to be one of the top underperformers in Europe. On the positive side, the country’s unemployment rate has remained low while wage growth has continued rsing. Also, the company is benefiting from the stronger pound and low shipping costs. 

The challenge for Next and other retailers is that they are having to spend more money on wages. In a recent statement, the head of Tesco warned that higher wages will be a challenge for many retailers for a while.

Next share price forecast

Turning to the 4H chart, we see the NXTL stock price has done well in the past few days. It has jumped from this month’s low of 6,330p to 6,908p. The current price is an important one since it was the highest level on May 12th. It has also moved above the 25-day and 50-day moving averages while the money flow index (MFI) is nearing the overbought level.

Therefore, it seems like the shares have a bullish momentum, which will see them rise to the next psychological level at 7,000p. A move above the psychological level of 7,080p will open up the possibility of it rising to 7,080p, the highest point in March.