Broker Pali International upgraded Next from neutral to buy in expectation that the fashion group’s share price will rise ahead of next month’s interims.

Pali analyst Nick Bubb said: “Next is our second favourite big cap, after Kingfisher. Though it doesn’t quite have the recovery potential of Kingfisher, it does have strong management and a defensive business model.”

He said that in the run up to first-half results on September 16, the shares, which have been trading at about £17, could move closer to £20.

Next’s update will come almost a year to the day since last autumn’s collapse of Lehman Brothers, after which high street spending went into freefall – meaning comparatives will be weak for the autumn season.

“Next should be confident enough about the outlook at that point, notwithstanding the uncertainty about the VAT increase in January and the continuing pressures on the consumer from rising unemployment. The recent recovery in sterling should also translate into reduced pressure on Far East buying margins,” he said.

Bubb increased his full-year pre-tax profit forecast 5% to £410m.