City view - Next vs. Marks & Spencer

Bernstein Research regards Next as more attractive than M&S over the short term on its superior credentials as a pure cyclical play.

Because the retail sector will likely discount a recovery well ahead of time the broker has sought to select the most likely retailer to benefit and it picks Next, with its solid management. However, over the longer term it has a preference for M&S as it believes the company has more cost efficiency and capital efficiency headroom than Next.

It retains its 'Outperform' recommendation on M&S and a price target of 300p, which compares with an underlying share price of 267.75p, and keeps its 'Market-perform' view on Next. However, it increases its price target on the business from 1,100p to 1,250p, which compares with the current share price of 1,230p.