FTSE 100: Next share price flirts with August 1 ½ year high

[MongiIG]

Next share price is in the process of breaking through resistance, could extend gains.

Source: Bloomberg

 

Indices Shares Price Next plc Candlestick Share price

 Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 13 September 2023 16:04

Next beat estimates in Q2

Next had much better sales than anticipated for the second quarter (Q2) (April to June) of the year. In just the first seven weeks of the quarter, sales for Next climbed 9.3%. This greatly surpasses the company's own prediction of a 5% decrease in sales for the entire quarter.

The increase in sales is likely due to nice weather, which often leads to more shopping, and a rise in real wages since April, which means people have more money to spend.

But, there are potential problems. Growth should be driven by improving sales, while consumer spending in the UK has remained fairly stable.

However, issues such as rising gilt yields, which could increase the cost of borrowing and spending for consumers, could pose a threat to future sales.

Technical analysis on the Next share price

Next’s share price, which has risen by over 21% year-to-date, remains on an upward trajectory with it this week briefly having risen above its July peak at 7,228 pence this week.

Next Weekly Candlesticks Chart

Source: Tradingview

Once the current September high at 7,336p has been exceeded, the October 2021 low at 7,426 could be reached ahead of the December 2021 low at 7,564. Both of these lows are part of the lower boundary of the major 2021 sideways trading band and now resistance which reaches all the way to Next’s 8,484p September 2021 all-time high.

This bullish forecast will remain valid while the August low at 6,724 holds.

Next Daily Candlesticks Chart

Source: Tradingview

Support above the key 6,724p low comes in around the 7,092 mid-August high and also along the 55-day simple moving average (SMA) and early September low at 6,948p to 6,936.

Analysts’ recommendations and IG sentiment

Fundamental analysts mostly rate the Next share price as a ‘buy’ with Refinitiv data showing 5 strong buys, 8 buys, 10 hold, 1 sell and 1 strong sell - with the median of estimates suggesting a long-term price target of 7,125.00 pence for the share, roughly 1% above the current price (as of 13/09/2023).

Source: Refinitiv

IG sentiment data shows that 53% of clients with open positions on the share (as of 13/09/2023) expect the price to rise over the near term, while 47% of clients expect the price to fall. Trading activity over the last week shows 54% of buys and this month 62% of buys.

Source: IG

 

 

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