Canaccord lifts target for Future, but uncertainties remain

Shares surged by around 25% on Friday after a solid second-half trading update, which Canaccord put down to a lack of negative news and a depressed valuation.

"Therefore, the lack of negative news was always going to be taken very positively given the weak share price performance," the broker said. The stock was trading at just five times current-year earnings prior to the update after falling by a third by the start of the year.

Future's GoCompare unit performed well, which "could get bulls arguing material undervaluation", Canaccord said, given that listed competitor Moneysupermarket trades at a price-to-earnings multiple of 14.

However, GoCompare's strength was outweighed by weakness in the wider digital media division, with organic digital advertising and affiliate revenue declining in the second half.

The broker said: "In our view, it is too early to be bullish on Future given the uncertainties around the strategy of the new CEO and macro-economic environment, and our estimates are c.17% below consensus for FY24E profit before tax."

Canaccord raised its target from 757p to 827p for the stock, though that remains well below the current 895p price as of 1045 BST on Monday.