Exane downgrades Next, upgrades Kingfisher

(ShareCast News) - Exane BNP Paribas downgraded its stance on Next to 'underperform' from 'neutral' and cut its price target to 7,400p from 7,700p, but upgraded Kingfisher to 'outperform' from 'neutral' and lifted its price target to 420p from 390p as it took a look at the retail sector.As far as Next is concerned, it said guidance implies an acceleration in revenues across the second half. The bank said that while one year comparatives look supportive, considering the two previous years, the headwind is more significant than may be expected."Given this, upside risk looks more limited from here. With relative valuation also stretched, we move to underperform."Still, Exane said Next continues to drive profit growth and cash generation and it's difficult to see this ending. Expansion of the Directory business overseas and into third-party brands provide further optionality to drive a re-rating, it said, adding that at this stage these are worth monitoring, but it remains too early to expect anything.On Kingfisher, it said that while the company is undergoing a programme of change, the journey is likely to be more important than the destination and visibility over the risks along the way is limited.It said the destination is clearer, with the £300m of scale synergies previously targeted still on the table given the limited progress since then."Our upgrade does not reflect a strong view on either the journey or destination. But with macro headwinds reversing, exaggerated concerns over structural fears are likely to subside, and the valuation discount should abate, leaving risk-reward weighted to the upside."At 0931 BST, Next shares were down 3.5% at 7,565p while Kingfisher was down 0.2% at 353.80p.