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Next share price: ShoreCap sees retailer as ‘fairly valued’

Shore Capital sees Next (LON:NXT) as ‘fairly valued,’ despite expecting its interim results to have benefitted from the warm weather, Citywire reports. The comments come ahead of the retailer’s second-quarter update tomorrow.

Next’s share price closed marginally lower in the previous session, giving up 0.14 percent to 5,860.00p and underperforming the broader UK market, with the benchmark FTSE 100 index giving up 0.01 percent. The retailer’s shares have added more than 54 percent to their value over the past year, as compared with about a 4.5-percent gain in the Footsie.

ShoreCap weighs in on Next

Shore Capital reaffirmed Next as a ‘hold’ yesterday, ahead of the group’s update tomorrow. Citywire quoted the broker’s analyst Greg Lawless as commenting that the blue-chip retailer traded on a price/earnings multiple of 13.9 times with a dividend yield of 2.7 percent, as well as strong cashflow that provides support to the share price, ‘as does the share buyback programme’.

“Next remains a well-managed company with tight costs and stock control,” the analyst pointed out, adding that despite the group’s first quarter profit upgrade, earnings were still expected to be marginally behind last year and the broker believed that the shares remained fairly valued.

In May, the FTSE 100 group hiked its full-year profit before tax guidance to £717 million from previous expectations for £705 million, while reiterating its forecast for £300 million of surplus cash which it intends to return to investors by way of share buybacks.

Other analysts on retailer

The 20 analysts offering 12-month price targets for Next for the Financial Times have a median target of 5,350.00p on the shares, with a high estimate of 6,700.00p and a low estimate of 3,731.00p. As of July 27, the consensus forecast amongst 23 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.  

As of 08:03 BST, Tuesday, 31 July, NEXT plc share price is 5,898.00p.

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