City still backs Future shares after dramatic crash
20th September 2022 15:41
by Graeme Evans from interactive investor
It’s been one of the market’s star stocks, but today’s bad news had investors nibbling away as analysts maintained chunky targets.
Zillah Byng-Thorne’s value to Future (LSE:FUTR) topped £300 million today after 2022’s CEO of the year and architect of a FTSE 250-listed digital publishing empire confirmed her departure plans.
Future shares slumped 277p to 1,380p, their lowest level since August 2020 and a discount of almost 25% on the position seen after last week’s better-than-expected trading update from the company behind brands including FourFourTwo and Country Life.
- Discover: How to buy Shares | Free regular investing | Super 60 Investment Ideas
As chief executive since April 2014, Byng-Thorne has taken Future from a £30 million small-cap to a company worth £2 billion by last night’s close and one valued considerably more when shares were as high as 3,800p at the start of this year.
The stock was among the best performing in the FTSE 250 during 2021 after revenues in the year to September rose 79% to £607 million and the company’s online reach registered one in three people in the UK and the US every month.
The strong performance was recognised at March’s Plc Awards, when Byng-Thorne became only the second woman to be named CEO of the year.
- Daily Trading Flash: 10 most-traded shares 20 September 2022
- Three mid-cap shares for value investors
The success has been built on an aggressive acquisition strategy that last year included the addition of rival publisher Dennis and the price comparison site GoCompare before that. These deals have helped to lift revenues 12-fold since 2014 to £819.5 million, based on a current portfolio of around 250 brands and 16 content verticals.
Earnings per share is now at 158.6p compared with a loss per share of 3.2p when Byng-Thorne started in the CEO role, driven by a margin in the region of 33%.
Consumer spending fears and the flight from growth and tech stocks have hurt Future shares, but Byne-Thorne remained optimistic last week as she told City analysts of her ambition for Future to extend its online reach to one in two users in the US.
Future is already regarded as a leading digital content property in the US, ahead of the likes of the New York Times and Conde Nast.
Last week’s trading update revealed that Byng-Thorne expects adjusted operating profit to be at the top end of market expectations, currently £266 million-£271 million, after seeing continued growth in digital advertising and improving trends in e-commerce.
Barclays followed the update with a price target of 2,500p, while Peel Hunt retained its 3,200p estimate and “buy” recommendation in the wake of the update.
The broker said: “Despite the challenging environment, Future continues to perform well, benefiting from a flexible operating model. Shares trade on 10x forward price/earnings multiple, which we believe is a good entry point for investors.”
Plenty of interactive investor customers used today’s slide as a buying opportunity, with Future shares among the top 10 most-traded shares on our platform today.
Following weekend speculation about her departure, Future said its chief executive was committed to the business but that she had indicated her wish to leave by the end of 2023.
Sky News reported at the weekend that she may be in line to lead the board of Trustpilot, having just been appointed a non-executive director of the consumer review business.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.