Next share price rallying ahead of full-year results

When is Next’s results date?

Next reports full-year earnings on 1 April.

Next full-year earnings – what does the City expect?

Next is expected to report earnings of £2.20 per share, down 52.2% year-on-year (YoY), while revenue is forecast to fall 16.5% to £3.64 billion. It has beaten profit estimates in seven of the last eight reports, but has missed estimates in six of the last eight for revenue.

Next has weathered the Covid-19 storm well, helped of course by its strong online arm. This will remain a pivotal part of the business even as shoppers return to the high street. For the bricks-and-mortar division the outlook is perhaps less bright, but at least the reduction in competition since the demise of Debenhams and Topshop will help the firm grow market share. The decision not to buy Topshop may well have been the most sensible, given the price tag. In any case, while the high street may recover, it is perhaps not wise to put more emphasis on a part of the business where growth is likely to be lower than online.

At 29 times current earnings, and 35 times forward earnings, Next is hardly a cheap business. But it is a proven one, and that carries much weight in the uncertain post-Covid-19 world. Even if the UK’s exit from lockdowns does not go as smoothly as planned, the online arm will still be able to provide a measure of support. But even so the high rating may prove to be a burden in the short term.

How to trade Next’s earnings

A total of 25 analysts cover Next shares, with 12 ‘buys’, nine ‘holds’ and four ‘sell’ ratings. The current target price of £75.41 represents a 3% discount from the current price of £77.70. On average, Next shares move 6.1% on results day.

Next share price – technical analysis

Next shares have maintained a steady rising trend in recent months, and while it fell back in January and February, it has held trendline support in March dips to £73.00 and then below £76.00. Like the broader FTSE 100, it has yet to recover the highs of mid-March, but the current recovery may push through £80.00 and then put the price on course to hit £81.85.

A solid, dependable performer

Next’s recovery from the pandemic lows has seen it finally move above the previous record highs at £73.50. As the high street sees footfall recover, Next is in a strong position, helped along by its online sales arm.