Is it irrelevant, or will the Upgrade make Next’s share price attractive?

• The chart shows Next’s share price movements since late February.
• Shares -15.7% from 2018 highs; +17.8% from 2018 lows; +19.7% year-to date
• HSBC has upgraded Next to Buy from (from Hold)
• It has also increased its price target to 5800p (from 5675p).
• Consensus summary: 6 Buys, 12 Holds, 6 Sell; Average target: 5424.13p (Source: Bloomberg).
• Current share price 5418p (at time of writing).
• Will the shares turn back, or will the upgrade push the shares back towards 6224p Jun/Jul highs?
• 31 Oct: Brokers at RBC Capital Markets say Next has reached a point where online growth is now able to offset the decline in retail stores.

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Trading Next – An Example

Let’s say you think that Next  shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Next  using a CFD, at the current price of 5418p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Next share price rises to 6224p (+14.8%). Your profit would be £1480 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 7% from the current price. Next shares resume their July-August downtrend, they fall 7% and hit your stop-loss. Your loss would be £700.

This is provided for information purposes only. It should not be taken as a recommendation.