Deutsche Bank raises target price on Future following Dennis Publishing acquisition

by | Aug 17, 2021

Analysts at Deutsche Bank raised their target price on media firm Future from 3,802.0p to 4,138.0p on Tuesday following the group’s £292.0m acquisition of Dennis Publishing.
Deutsche Bank said the acquisition brought a subscription-based US-focused, fast-growing magazine business to Future, a fit that the analysts believe “looks good”.

While it is paying a premium valuation, DB stated this was justified by a higher quality of earnings, and material potential synergies which will bring the valuation down.

In addition, the German bank highlighted that while the deal was entirely debt funded, given the speed of deleverage, it still had “plenty of scope” for additional bolt-on deals.

“The deal is 10% earnings enhancing in FY22 (deal completes on October 1, so has a full-year contribution in the year to September 2022) and should generate a first year ROIC of 7.0%, rising to 12.2% by 2024E. And, with over £200m per annum of free cash flow from 2024E, leverage should fall rapidly (just 0.4x Debt/Ebitda by end 2023E),” said Deutsche Bank.

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