Sharecast - The bank noted that Next shares have risen almost 50% from the October lows, and argued that on 13.2x 23/24 estimated price-to-earnings, they do not look cheap versus its history, retail peers, or the UK market.
"While Xmas trading was strong for most retailers, we see downside risk to demand in the spring, given tough comps, and as UK property prices and employment soften, while the outlook for opex remains challenging," CS said.
"With limited upside to valuation and strong execution already discounted, we downgrade our rating to underperform (from neutral) as we believe Next is likely to underperform stocks which look cheap versus history, offer greater leverage to a recovery or which can surprise in terms of execution."
CS said it prefers outperform-rated Marks & Spencer, JD Sports and Primark owner Associated British Foods (LON:ABF).
The bank lifted its price target on Next shares to 6,100p from 5,200p.
At 0910 GMT, Next shares were down 1.3% at 6,432p.