Broker snap: UBS ups Next target ahead of Q2 results

19th Jul 2012 11:21

UBS has raised its target price for High Street fashion and homeware retailer Next from 3,250p to 3,500p and reiterated its 'buy' rating on the stock ahead of its second-quarter results."We believe Next may have escaped the worst impact of the weather in Q2. Budgets and stock levels are traditionally kept tight, Directory may have benefitted from the weather and (although unquantifiable) stock shortages at the market leader may also have helped," UBS said in a research note on Thursday.The broker expects Next brand sales to have risen by 2.2% in the first half (Next is guiding for 1-4% growth) with second-quarter sales up 3.3%.UBS also said that the macro-economic environment is expected to improve in the second half: "Recent days have produced both lower unemployment figures and lower inflation, underpinning Next's expectations of a gradually improving backdrop. Bought-in gross margin should improve modestly."The broker said: "Forecast stability continues to set Next apart from the non-food peer group."By 11:20, shares were up 0.31% at 3,234p.BC