Broker snap: Brokers raise forecasts for Next

5th May 2010 11:57

Shares in Next shifted into reverse on Wednesday after the company's trading update, despite brokers queuing up to praise the company.KBC Peel Hunt said Next had made a strong start to the year, with the sales run rate ahead of the broker's assumptions. KBC Peel Hunt responded by upping its full year profit before tax estimate to £562m from £529m and lifting its price target from 2350p to 2450p.The broker believes Directory, the online and catalogue arm of Next, continues to provide significant protection in the event of an economic downturn. "With product and marketing also much stronger than it has been for some time, we believe Next is well set to deliver another successful year, despite the pressures on disposable income and consumer spending for H2 [second half of 2010]. In addition, moves to take Directory overseas offer an interesting growth option for the medium term that remains largely outside our forecast assumptions," KBC analyst John Stevenson said. The broker has retained its "buy" rating on the shares. Panmure Gordon has also raised its profit forecast, by around £5m, and is now expecting pre-tax profits for the current year will be £554.6m. "Management expect the company to achieve FY 2011E [fiscal 2011] PBT [profit before tax] at the top end of consensus range, the range being £525-£565m, with an average (source: company) of £542m," the broker notes."Next's current collection looks on trend, it is increasing its exposure to a younger and/or more fashion conscious customer, it is a true multichannel retailer and has a management team which is committed to returning capital to shareholders. We reiterate our Buy rating," said Panmure analyst Jean Roche.