JOUL.L Share News (JOUL)

(Sharecast News) - Liberum downgraded its recommendation on shares of Next to 'hold' from 'buy' on Wednesday as it argued that the stock's valuation is now up with events.
The broker said Next's "solid" third-quarter update earlier in the day extends the company's "very credible run of reporting" and leaves guidance unchanged. It pointed out that the usual trend of online sales growth outweighing a decline in stores continues.

"Since we upgraded to buy in January, the shares have risen 64% and we now feel that the current valuation is up with events, hence our move to hold on valuation grounds," it said.

Liberum said it remains "very positive" on the fundamentals and management's strategic nous.

"We think the pattern of trading from July-October is likely to provide useful insight for Superdry, Ted Baker and Joules. The colder and wetter weather in October should have allowed for full margin sell through in October of Autumn/Winter product, potentially providing some good news for those fashion retailers that held their nerve through an unfortunate September."

The broker lifted its price target on Next to 7,000p from 6,500p.

Next posted a rise in third-quarter full price sales earlier and backed its guidance for 2020 but said the improvement it saw in October is not expected to continue for the rest of the year.

In the quarter to 26 October, full price sales rose 2% on the previous year, which was slightly ahead of the guidance it gave in September. For the year to date, full price sales were up 3.5%.

Retail sales fell 6.3% in the third quarter, but online sales were up 9.7% and product full price sales grew 1.6%.

The company backed its guidance for annual full price sales growth of 3.6% and its pre-tax profit guidance of £725m for the year, up 0.3% on last year.

At 0940 GMT, Next shares were down 2.6% at 6,671.86p.