The Expert View: Next, Darty and Whitbread

We’ve chosen some of the best comment from analysts to give you their views on Next, Darty, Whitbread, Home Retail Group and Berkeley Group.

Key stats
Market capitalisation	£5,503m
No. of shares out	165m
No. of shares floating	155m
No. of common shareholders	not stated
No. of employees	28685
Trading volume (10 day avg.)	0m
Turnover	£3,441m
Profit before tax	£434m
Earnings per share	251.48p
Cashflow per share	320.73p
Cash per share	40.83p

*Correct as at 13 Sep 2012

Oriel cautions investors as Next sales slow

Eithne O’Leary, analyst at Oriel, has warned that shares in clothing retailer Next (NXT.L) will come under pressure following disappointing sales in recent months.

Although pre-tax profits rose 10.2% to hit £251 million, the group's forecast was decidedly gloomy: ‘August and early September sales have been disappointing during what has been an unusually quiet period. We remain cautious about the economic outlook,' it stated.

O’Leary noted that the group's online operation continues to perform well, but there's no masking the worrying tone of the outlook statement.

'Whilst Next management has always erred on the side of caution, this morning’s comments mark a departure. To describe sales in August and September asdisappointing will unsettle investors,' she said. O’Leary is sticking with a 'hold' recommendation at the moment.

Shares in the group closed at £33.18 on Thursday, down 261p or 7.29%.

Key stats
Market capitalisation	£289m
No. of shares out	530m
No. of shares floating	528m
No. of common shareholders	not stated
No. of employees	16986
Trading volume (10 day avg.)	0m
Turnover	3,220m EUR
Profit before tax	-30m EUR
Earnings per share	-0.06 EUR
Cashflow per share	0.17 EUR
Cash per share	0.15 EUR

*Correct as at 13 Sep 2012

Seymour Pierce upgrades Darty as chief exec steps down

Kate Calvert, analyst at Seymour Pierce, has upgraded electronics retailer Darty (DRTY.L) from 'sell' to 'hold' amid news that chief executive Thierry Falque-Pierrotin is to leave the company by 'mutual agreement'.

Over the past quarter group revenues increased by 1.1% in local currency terms but were flat on a like-for-like basis. The group said all of its markets have remained challenging, with sales in the vision market 'very weak' particularly in France following the digital switch-over last year.

'Despite a low valuation, expected continued weak trading performance makes it difficult to be positive from a fundamental perspective,' Calvert said. 'However, the £40 million of losses reported by its Other developing businesses (Italy, Spain and Turkey) are unacceptably high and, it is clear that management is preparing to take action.

'If there is no quick short term trading solution, then corporate action is increasingly likely especially after management's recent agreement with its main shareholder to work together to realise value.'

Shares in the group closed at 53.25p on Thursday, down 2.25p or 4.05%.

Key stats
Market capitalisation	£4,014m
No. of shares out	178m
No. of shares floating	171m
No. of common shareholders	not stated
No. of employees	30484
Trading volume (10 day avg.)	1m
Turnover	£1,778m
Profit before tax	£267m
Earnings per share	151.19p
Cashflow per share	212.50p
Cash per share	22.65p

*Correct as at 13 Sep 2012

Nomura lifts target price for Whitbread

Tim Barrett, analyst at Nomura, has increased his target price for pub and restaurant operator Whitbread (WTB.L) having analysed the group's new long-term incentive plan.

The analyst said the new plan should lift return on capital employed (ROCE) from 13.6% to 16.6% by encouraging management to consider disposing of assets where this would create value.

He added that the most fundamental step would be a complete exit from the pub business. 'We calculate that an exit at close to book value would add 240 basis points to group ROCE and provide cash to fund growth in Premier Inn and Costa, or a return to shareholders,' he added.

The group's Costa Coffee chain will be the main driver of growth in the years ahead, he said, with plenty of room for expansion in the UK and untapped potential in overseas markets including China. Based on his analysis Barrett has increased his target price by 20% to £26.50, and he reiterated a 'buy' recommendation.

Shares in the group closed at £22.70 on Thursday, up 34p or 1.52%.

Key stats
Market capitalisation	£774m
No. of shares out	813m
No. of shares floating	790m
No. of common shareholders	not stated
No. of employees	50254
Trading volume (10 day avg.)	4m
Turnover	£5,583m
Profit before tax	£73m
Earnings per share	9.06p
Cashflow per share	24.81p
Cash per share	24.91p

*Correct as at 13 Sep 2012

Investec puts Home Retail Group's target price under review

David Jeary, analyst at Investec, has put his target price for Home Retail Group (HOME.L) under review following a second-quarter statement that showed improving sales at its Argos catalogue-shopping chain.

Like-for-like (LFL)sales in the 13 weeks to 1 September rose 1.4%, a big improvement on Jeary's forecast of a 0.8% decline.

'This is the second consecutive quarter of much improved LFL sales, largely due to a more supportive electricals goods market (about 50% of divisional sales),' the analyst said.

'On the back of this improved trend at Argos, we are placing our sub-consensus £63 million pre-tax profit forecast and sum-of-the-parts-based target price under review, and retain our buy recommendation.'

Shares in the group closed at 95.1p on Thursday, down 4.3p or 4.33%.

Key stats
Market capitalisation	£1,968m
No. of shares out	131m
No. of shares floating	116m
No. of common shareholders	not stated
No. of employees	1139
Trading volume (10 day avg.)	0m
Turnover	£1,041m
Profit before tax	£159m
Earnings per share	112.78p
Cashflow per share	113.32p
Cash per share	2.09p

*Correct as at 13 Sep 2012

Deutsche Bank lifts target price for Berkeley Group

Glynis Johnson, analyst at Deutsche Bank, has increased her target price for homebuilder Berkeley Group (BKG.L), believing consensus earnings estimates are too low.

'Our detailed analysis of Berkeley's London and student developments continues to provide us with comfort in our forecasts for FY 14 which remain 30-35% above consensus,' she said. Her target price rises to £17.64 from £15.72.

'However reflecting a further look at the longer term land bank, we now feel confident to raise our forecasts for FY 15 and beyond reflecting the greater longevity of the higher volume and pricing.'

The analyst said risks to her forecasts include a possible weakening of the London property market, lower margins on land acquisitions, any change of management, and a possible strengthening of the pound.

Shares in the group closed at £14.92 on Thursday, up 23p or 1.57%.