Broker snap: Forecasts downgraded at Next

24th Mar 2011 12:16

Next has revealed a strong set of results with inflation views moderating in the near-term, but Peel Hunt keeps its cautious stance on the retailer as its outlook suggest flat profits in the current year.Pre-tax profit for the 12 months ended January 2011 was up 9% at £551m, slightly above the broker's forecasts of £550.3m and in keeping with the market range. "We view this as a strong outcome for the year, backed by continuing strong levels of cash flow and the buyback," said analyst John Stevenson.However, Next's sales and profit growth expectations for the year ahead point to pre-tax profit being -5% to +5%, and Peel Hunt expects to downgrade its profit estimates by 4%. "Trading on a 2012 price-to-earnings multiple of 8.4, the shares already factor such views in, although Next's dose of realism may weigh on the shares and sector today," said Stevenson.The broker keeps a 'hold' and target price of 2,300p.