U.K.’s Best Stock Of 2019 Is Also an Unlikely Virus Winner
Publisher Future Plc is proving to be an unlikely winner of the pandemic as readers flock to its niche websites such as product reviewer Tom’s Guide, helping it outperform larger media peers that have struggled with dwindling advertising budgets during this year’s lockdowns.
Shares in Future, which also publishes special interest titles including Horse & Hound, Gizmodo U.K. and Practical Boat Owner, surged as much as 18% to its highest level in almost 20 years on Monday, following an upbeat trading statement.
While larger peers in the Stoxx 600 Media Index have collectively seen their share prices slump more than 20% in 2020, Future’s shares are up 15% during the same period, building on last year’s 200% rally that earned it a cult-stock reputation and outperformed all other stocks in its home FTSE 250 index.
Future is perhaps not the most obvious beneficiary from the pandemic in the same way that video game firms, online food delivery companies and tech hardware suppliers have seen a boost to their businesses from house-bound customers.
However, Future said that it continues to benefit from the move to digital media, with visitors to its websites rising 25% in the U.K. in August compared to the previous year, and 40% in the U.S., according to Monday’s trading update. The company now expects its full-year results, due in December, to be “materially ahead” of market views.
Berenberg analyst Edward James noted that Future has announced its second upgrade during a “testing time” for the media industry.
“The results illustrate the strength, scalability and flexibility of Future’s business model, as well as business (and management’s) ability to absorb acquisitions effectively and drive synergies,” James, who has a buy rating on the stock, said in emailed comments.
Barclays analyst Nick Dempsey, who has an overweight rating on the stock, reckons that investors will begin to focus on the potential for more deals as Future delevers quickly. “Future keeps on delivering better-than-expected progress and we think that this can continue over time,” he said in a note.
©2020 Bloomberg L.P.