Two high-profile FTSE 100 shares rated 'buy' – Analysis & Commentary – Interactive Investor

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Source: TradingView (*) Past performance is not a guide to future performance

Like many FTSE 100 stocks, Prudential (LSE:PRU) shares took a hammering at the end of 2018 only to recover in the early part of this year. Kelly has previously argued that the market is too cautious on the execution risk and uncertainties posed by the M&G Prudential demerger.

Completion is not expected until later in the year, but Kelly thinks there’s a potential catalyst for shares as Prudential ticks off the various milestones on the road towards creating a separately-listed business.

What’s more, the UK arm is approaching the split from a “position of strength” after operating profits rose 13% on a like-for-like basis yesterday. Overall, group profits were 6% higher.

Full-year results from Next (LSE:NXT) are due next Thursday, although guidance from the company in January has already put analysts on standby for flat profits of £723 million in 2018/19. Central guidance for the current financial year is for a small decline to £715 million.

At this early stage, UBS analysts said it would be a surprise to see any change in Next’s estimates, which are based on a 1.7% rise in full price sales. The retailer remains highly cash generative, which should enable it to return another £300 million to shareholders through its ongoing share buyback programme.

Shares traded above £60 for a brief spell last summer, only to fall back to nearer £40 on fears of a disastrous Christmas for UK retailers. Those worries were overdone but UBS still thinks that the City is undervaluing the stock and particularly the momentum in its Label business, which sells third-party ranges from brands including adidas (XETRA:ADS), Boohoo (LSE:BOO) and French Connection (LSE:FCCN).