Broker snap: Next results at top end

16th Sep 2009 12:44

KBC Peel Hunt is contemplating upgrading its target price, earnings forecasts and rating for Next after the fashion retailer's impressive interim results on Wednesday morning.The broker expects consensus forecasts for full year pre-tax profit are likely to rise as a result of the half-year update, and may even move above last year's pre-tax profit of £429m. Profit before tax (PBT) at the half year stage rose by 6.9% to £185.5m, ahead of KBC's expectations and towards the upper end of market expectations.'Management guidance points to H2 LFL [second half like for like] sales declines of 3.5%-6.5%, which we find conservative, with Directory growing by up to 2%,' analyst John Stevenson said.'Such performance would raise PBT towards last year's £429m, although we see scope for further outperformance,' Stevenson asserts, adding that the Next Directory offering 'offers good margin protection in a tougher trading environment.'