THG PLC (LSE:THG) is likely to enjoy growth across all of its divisions this year, analysts have forecast, with growth expected to be fuelled by strategic partnerships.
“Although a divisional IPO has been mooted, we see a strategic partnership as potentially more likely, opening up new growth and synergy options,” Jefferies said in a note on Thursday.
This could well involve a minority stake in either the e-commerce retailer’s beauty or nutrition divisions, “providing upside for the investing partner”, said the bank.
Jefferies analysts said that there was “clear confidence” in THG’s growth this year, having met with the firm’s management in recent weeks.
Though the shares have fallen nearly 20% since the start of the year, Jefferies said it saw material upside to a share price target of 105p, which is itself up 75% on Wednesday’s closing value.
This follows THG’s shift to higher-margin sales since Lucy Gorman took the helm in August, alongside its beauty division’s return to positive territory in the final quarter of last year and the Ingenuity platform’s new focus on enterprise clients.
THG’s nutrition wing is poised for a more challenging start to the year, Jefferies acknowledged meanwhile, adding that “we see the group's confidence in its 2024 growth agenda as notable”.
Jefferies reiterated a ‘buy’ rating for THG.