Liberum calls Next 'a clear winner'
Analysts at Liberum took a fresh look at retailer Next on Thursday, stating the firm was "a clear winner", with multiple macro and micro drivers.
Liberum said Next offers exposure to the structural growth that multi-channel platforms were delivering and said there were only two options to play this theme in the UK, with the other being Frasers.
Next is not just a retail and technology play where superior margins will flow from the label and total platform but as a brand owner offers IP opportunity that could see earnings accelerate over time," said Liberum.
The analysts also highlighted that selling branded IP globally could deliver high margin licensing revenue which would further drive a material re-rating of the group as return on invested capital expands.
"Guidance for FY’24E is conservative but it is the outer years where FCF becomes a key valuation driver being > 7% FY24 and beyond," said Liberum, which stood by its 'buy' rating and 7,500.0p target price on the stock.
"Excess cash will be returned to shareholders via dividends and buybacks and combined with 6-7% PBT growth in the meantime the shares offer double-digit returns."
Reporting by Iain Gilbert at Sharecast.com