Credit Suisse has suggested that Next could be a bid target for Marks & Spencer, arguing that investors do not appreciate the extent of the structural problems facing Next.

In a 112-page study of the fashion retailer, Credit Suisse said M&S could pay a significant premium for Next – up to£20.

Credit Suisse analyst Tony Shiret said: “We have reviewed possible takeout scenarios and in particular considered the merits of a scenario in which Next is bought by Marks & Spencer. M&S has never publicly expressed an interest in Next, but we believe this would significantly enhance its strategic prospects.”

He added that Next faces more structural problems than previously thought and that it was not sure if a “fundamental recovery” could be achieved. It cited problems at Next including its large-store performance, childrenswear, achieving scale in its home business and the credability of its price positioning.

However, Pali International analyst Nick Bubb branded the suggestion of a bid for Next by M&S “a bit far-fetched”. He added: “The criticisms of Next seem a bit over the top, given the strength of management's record, but there is no doubt that retail sales are still struggling, despite the improvements to ranging, marketing and the stores.

“M&S also has its problems and, although there is no record of them buying another brand (apart from Brooks Bros in the US), it did look at Sainsbury’s this time last year and Next might solve the M&S management succession problem for Stuart Rose.”

Bubb said an alternative scenario could be that Next is taken private.