Broker Peel Hunt has initiated coverage of magazine publisher Future PLC (LON:FUTR) with a ‘buy’ rating and a price target of 610p.
The magazine group reported strong annual earnings growth on Friday after diversifying its revenue streams and increasing its global reach through acquisitions.
READ: Future annual profits soar on acquisitions, increased monetisation of brands
The firm, which prints titles such as TechRadar and PC Gamer, posted an 88% rise in earnings (adjusted EBITDA) to £20.7mln in the year to the end of September on revenues 48% higher at £124.6mln.
Analysts at Peel Hunt said Future’s focus on specialist media, one of the most attractive sectors in the publishing world, would stand it in good stead.
Future said its annual media revenue almost doubled to £64.2mln while its online revenue per user increased in both the UK by 26% to £1.68 and the US by 32% to £0.96 as the company more effectively monetises its audiences.
“The company has built a best of breed technology platform to support future growth of its highly lucrative media revenues, which has strong operating leverage. The stock is currently trading on 19x FY20 PER, but we expect more upgrades to come, not only through organic growth but also through M&A,” the analysts said in a note to clients.
“Internal inefficiencies have now been fixed and going forward, the company’s focus is on fast growing and high margin media revenues. Future’s three-year EPS CAGR is 12%. Our DCF and multiple based valuation leads to a target price of 610p,” they added.
Future shares were 7.6% up at 520.0p in early trade.