Jefferies has lifted its price target on Next, the fashion and homeware retailer, from £145 to £158 ahead of the company's third-quarter trading update, arguing the stock can re-rate back to recent valuation highs as its international business gathers momentum.
The broker, which maintains a hold rating on the stock, said cooler autumn weather towards the end of October was likely to have rescued what had been a sluggish start to the third quarter for UK clothing retailers generally.
Jefferies forecasts Next's UK full-price sales grew 2.9% in the quarter to 29 October 2026, broadly in line with the second quarter's 2.8% and supported by an easier year-on-year comparison as the weather and disruption at rival Marks and Spencer that boosted the prior year period faded.
Industry data from BDO showed fashion sales averaged just 0.3% growth in the first seven weeks of the quarter, but the analysts expect the recent temperature drop to have improved momentum.
International sales, which grew 37% in the second quarter, are expected to slow to around 21.5% in the third, reflecting a tougher comparative and a normalisation of the Middle East catch-up growth that inflated earlier numbers.
The broker pushed its full-year profit before tax estimate to £1.262 billion, ahead of the consensus of £1.256 billion and Next's own guidance of £1.255 billion.
Jefferies said Next's current valuation of 17.7 times its 2027 earnings estimate no longer looked stretched, and that there was no reason the stock could not recover to the relative valuation peaks it achieved against European clothing peers.
The upgraded £158 target is based on 18.5 times 2027 earnings, representing a 10% premium to European clothing rivals including Inditex and H&M.
The analysts cautioned that guidance upgrades were unlikely to be forthcoming until after the crucial Christmas trading period, meaning investors may need to be patient.
Next shares were trading at around 15,280 pence, giving the company a market capitalisation of approximately £18.4 billion.
