MARKET REPORT: Next Suffers as Deutsche Urges Investors to Buy M&S Instead

Article excerpt

NEXT, THE high Street retailer, found itself firmly on the FTSE 100 fallers list yesterday as downbeat comments from stock broking giant Deutsche Bank unsettled investors.

Next shares fell 23p to 867p as Deutsche reduced its full-year pre-tax profit forecast by 4 per cent to pounds 289m and downgraded its rating on the stock to "hold" from "buy". Although the broker referred to Next as one of the best run companies in the retail sector, Deutsche believes that in the short term the group will not outperform. It worries the highly competitive environment on the high street will subdue Next's market share gains and fears the group has missed out on some key fashion trends.

Deutsche downed its price target to 900p from 1,000p and urged investors to buy Marks & Spencer, up 3.75p to 378p, and Dixons, 2.5p better to 193p. It believes both will have a profitable Christmas. Meanwhile, the wider FTSE 100 index retreated 42.7 points to 3,997.0 amid more negative US economic data.

Vodafone fell 3.5p to 99.25p as Banc America Securities downgraded to "market underperform" from "market perform" and set an 80p price target. It told investors that Vodafone is no longer a growth story and warned that the revenue it generates from each of its subscribers in Europe could start of disappoint the market. Banc America believes the premium at which Vodafone shares trade, relative to the rest of the sector, is unjustified and argued that the group's cash flow growth prospects are no better than most of its rivals.

Reuters gave up 4p to 184.5p as UBS Warburg reiterated its "reduce" rating after meeting with management earlier in the week where the group showcased two new products. UBS worries that the new products could steal revenues from existing products as opposed to generating new sales.

In the FTSE 250 index, which fell 4.0 points to 4,413.7, constructor AMEC was the worst performer. Its shares fell 13.5p to 194.75p as Schroder Salomon Smith Barney warned clients of the deteriorating outlook for AMEC's commercial markets and downed its rating and forecasts. …