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Barclays starts Next with ‘overweight’ rating citing online offer progress

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Next PLC (LON:NXT) has been tagged with an ‘overweight’ rating and a 7,200p target price by Barclays as the bank started coverage on the retailer ahead of a trading update due next week.


The Barclays analysts expect Next’s UK stores to contribute just 31% of sales and 14% of underlying earnings (EBIT) by calendar 2022 as the growth of online sales dominates


READ: Next to adopt “slightly more adventurous” styles as it gears up for changes in consumer behaviour


The FTSE 100-listed retailer is also expected to return 8.4% of its market capitalisation to shareholders over the next five years.


“With its online business generating mid-teens percentage sales growth and margins, NEXT offers an interesting mix of growth and cash returns … NEXT has made more progress in this direction than some may appreciate,” the bank’s analysts said in a note to clients.


“The share price has admittedly risen by over 80% since April, but for investors with a longer-term horizon we think the shares still offer attractive upside.”


Next shares added 3% to 6,344p on Tuesday morning, helped too by reports of an upgrade in rating to ‘neutral’ from ‘sell’ by US investment bank Goldman Sachs.

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