Berenberg upgrades Future to ‘buy’, hikes price target

Berenberg upgraded Future on Tuesday to ‘buy’ from ‘hold’ and hiked the price target to 1,310p from 850p following "positive" first-half results, which indicated that organic growth has troughed.

The upgrade is also due to positive commentary from US peers regarding Q1 advertising trends, Google’s decision to delay third-party cookie deprecation and evidence that AI-enabled search will likely benefit market leaders.

Berenberg said the most important catalyst for Future is a return to organic growth within its media division.

"Future’s H1 results (released on 16 May) indicated that organic growth for the division troughed in H223," it said.

"Online audience figures, a leading indicator of revenue growth, also look to have stabilised, particularly in core categories such as technology and gaming (54% of web users).

"Our analysis indicates that Future needs to deliver 4% revenue growth in H2 in digital advertising and e-commerce to reach consensus. We think that this is achievable given the easy comparable, the fact that Future’s US digital advertising returned to growth in Q2, and Q1 commentary from peers such as Dotdash Meridith, Ziff Davies and Meta, which has noted improving advertising yields in the US."

Berenberg noted that the shares trade on a FY24 price-to-earnings of 9x, which it thinks is attractive given that we could be at the start of an upgrade cycle and bearing in mind chief executive Jon Steinberg’s comments regarding portfolio optimisation.

At 0920 BST, the shares were up 2.3% at 1,123.70p.