ShoreCap stays at buy on Future after purchase of Denis

(Sharecast News) - Analysts at ShoreCap hailed media group Future's debt-finance acquisition of Denis for £300.0m.
Although Future paid "chunky" historic multiples of three times sales and 20 times earnings before interest, taxes, depreciation and amortisation, Denis's sales had grown at a double-digit pace over the 12 months to June 2021.

ShoreCap also noted the expected annual cost synergies of £5.0m and that the purchase was expected to be "materially earnings enhancing".

Furthermore, Denis's revenues were predominantly subscription-based, enhancing their visibility and with positive implications for "cash flow, customer retention and access to data".

"We are encouraged by this transaction which should slot into Future broad portfolio, and its tech

platform allowing the rapid realisation of synergies and growth acceleration on both sides of the

deal."

However, while ShoreCap retained its 'buy' recommendation on the shares, it conceded that they were now changing hands at a premium 2021 price-to-earnings multiple of 29.0 times.

"We retain our BUY recommendation for now but recognise that the group performed very strongly (+54% over 3 months) resulting in a premium valuation (FY21F P/E and DY ratios 29x and 0.1%, respectively see overleaf), so will review this position along with our forecasts following contact with management this morning."