Deutsche Bank cuts target price on Next

Analysts at Deutsche Bank slashed their target price on retailer Next from 9,250.0p to 7,850.0p on Thursday, stating investors need to "think differently" about the stock.

Deutsche Bank noted that Next has increasingly been talking about the medium-term and this should make investors take notice.

The German bank said for many years Next operated its business "very effectively" on a "marginal gains" philosophy, with many small steps being taken to manage the business and evolve to external market conditions.

"In our view, the change started with the Total Platform where Next realised its investments and expertise could be monetised with other brands beyond the brand aggregator model," said the analysts.

Deutsche Bank said the medium-term outlook for Next was important, as the required investment in technology and logistics will be larger and the income stream derived over a longer period.

"It may not happen overnight but investors need to think differently about Next and the increased visibility on its earnings stream," said Deutsche.

However, Deutsche Bank still thinks that Next offers larger growth prospects and is more defensive than it has been given credit for, leading it to stand by its 'buy' rating on the stock.