Broker snap: Next is a keeper, says Nomura

16th Sep 2010 12:33

It's been a busy morning for retailers and Nomura Securities is sticking with the programme with an appreciation of recent results from fashion retailer Next."Next first-half results had it all for the bulls. Confidence in product, a pipeline of profitable/high return on invested capital space, acceleration in online sales, and prospect of buybacks. In sum, the possibility of 9-15% annual earnings per share growth plus dividends," enthused analyst Fraser Ramzan.Despite all that enthusiasm, however, the broker still prefers Marks & Spencer (M&S) in the clothing retail sector, though it does regard Next as a core sector holding for the long term.Given the potential for earnings growth the stock is inexpensive, Ramzan reckons. The broker has a price target of 2413p for the stock. "Near term, we see upside to M&S (market share growth / margin improvement), but see no reason to sell Next to fund it," the broker said.