(ShareCast News) - HSBC upgraded Next to 'neutral' from 'underperform' but cut the price target to 4,100p from 4,600p after the shares fell more than 17% in two days and following the company's profit warning on Wednesday.However, the bank said it remains extremely cautious about the retailer's long-term prospects."We are increasingly of the view that Next's problems relate more to the company's strategy than the overall performance of the UK apparel market," CS said.CS said it now expects earnings per share to drop by an average of 5.3% per annum for the next four years, as Next brand EBIT margins fall from 20% to 15.4%.Meanwhile, HSBC downgraded its stance on the stock to 'reduce' from 'hold' and cut the price target to 3,530p from 4,680p. It said that while the fourth-quarter trading update disappointed, the outlook for full-year 2018 and beyond is even more concerning."The continued underperformance of clothing and footwear beyond the anniversary of the slowdown in November 2015 suggests Next is suffering from a cyclical slowdown in total demand, and out of apparel into other product categories. This is consistent with our expectation of a slowdown in UK consumer spend in 2017 amid a real wage squeeze, and impact of cost-push inflation pressures, including FX," HSBC said.The bank said this adds to long-term concerns over the decline in credit customers that underpin UK Directory sales, erosion of online advantage, and customer offering in an increasingly competitive and fast-moving apparel market.On Wednesday, Next shares tumbled after it lowered its guidance for the full year as sales slipped over the key Christmas period and warned sales and profits will fall further in as the cyclical slowdown in spending on clothing and footwear continues in 2017.Group sales from the start of November until Christmas Eve shrank 0.4%, as a 3.5% decline in shop sales was largely offset by directory sales picking up 5.1%.This was well short of the market forecast of roughly 2% against poor numbers from the same period last year and means for the year to 24 December total group sales have fallen 1.1%.Central profit guidance for the full year to the end of January has been cut to £792m from the previous £785-825m range, with a central point of £805m, and management warned it may increase or decrease by £7m depending on trade in January.