Canaccord upgrades Future to 'hold' on GoCompare strength

Canaccord Genuity has upgraded its rating for multimedia group Future Plc from 'sell' to 'hold', saying that downside risks "look limited for now".

The company, which owns publications like Marie Claire and Wallpaper+ along with TechRadar and GoCompare, earlier this month reduced its margin expectations for the next three years due to increased investment to drive the business back to growth.

However, the strength of the GoCompare business is supporting the stock's valuation, Canaccord said.

"While there remains uncertainty around the long-term growth and margin structure of the business given structural and cyclical headwinds, we believe GoCo now supports the share price - a business that, so far, is seeing revenue growth and margin improvement," the broker said.

Canaccord reckons that GoCompare could be worth 347p per share, equivalent to 50% of the current share price.

"As a result, despite the risk of further downgrades to guidance, we upgrade our recommendation to 'hold' (from 'sell') and lower our target price to 660p (from 758p). Future is now a show-me story, with the next key potential catalyst likely to be six months away at the interim results," Canaccord said.

The stock trades at jut six times 2024 estimated earnings with a free cash flow yield of 15%, and sits at just 687.5p after a near-50% drop in the stock since the start of the year.