(Sharecast News) - Citi upgraded its stance on shares of Next to 'neutral' from 'sell' on Friday as it said the retailer is "well placed" to cope with the impact of the coronavirus.
"The high EBIT margin (16%) and significant online proportion of sales (circa 55%) are buffers to any earnings per share downgrades," it said.
It also said that the "highly cash generative" business may see a postponement of its share buyback but there is no balance sheet risk.
Citi noted that the shares have sold off about 40% since the coronavirus news flow began, which it reckons is excessive.
"Expect FY21e sales guidance to be lowered to flat (from +3%) and profit before tax to ?650-670m (from ?734m) but reassurance that this will largely be recovered in the following year," it said.
The bank said it was making no changes to FY20 estimates and leaving its PBT forecast at ?727m, in line with guidance. It cut its FY21 PBT estimate by 14% to ?634m and FY22 by 9% to ?684m given the expected impact from Covid-19 in the UK.
At 1045 GMT, the shares were up 4.3% at 4,576p.
Next (NXT)1 May 2024 16:42
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