Liberum stays at 'hold' on THG

Liberum said THG shares continue to attract investor interest given the "quality of the underlying businesses".

The broker stated that bulls often make the sum-of-the-parts valuation argument, but said it thinks SOTP may not the best way to value THG when weighed against the capital intensity of the group.

"Holding all things equal, we think FCF generation remains central to driving the shares from here on. Even at target margins, THG would generate low FCF yields on the current share price," said Liberum, which also stood by its 55.0p target price on the stock.

"Outlook for trading in 2023 appears tough, but profits recovery and Ingenuity wins could reignite interest. If the group were to split, then material upside to the current valuation exists."

Reporting by Iain Gilbert at Sharecast.com