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(Sharecast News) - Analysts at Berenberg downgraded publishing firm Future from 'buy' to 'hold' and slashed its target price from 970p to 330p on Wednesday as it said the impacts of AI were "likely to continue".
Following Future's first half pre-close statement on 31 March, Berenberg cut its FY26-28 earnings per share estimates by roughly 20-30%, noting that over the coming years, it expects Future's programmatic and e-commerce revenue to continue to be negatively affected by audience declines as large language models scale.
"These are high-margin revenue streams and, although Future is looking to offset these declines through other strategic initiatives, these initiatives are lower margin," said Berenberg. "This is likely to result in a continued adverse margin mix shift, which is reflected in our FY26-28 forecasts."
The German bank noted that the market "remains highly sceptical" about businesses directly impacted by AI and, although its valuation "appears cheap", does not expect a material re-rating from Future until it sees evidence of the impact of AI easing.
"Our new price target of 330p is based on a sum-of-the-parts and peer multiple of 3.7x applied
to our FY28 EPS estimate. We expect greater focus on realising shareholder value from the portfolio given the valuation, with this being the main risk to our 'hold' thesis in the short term," said Berenberg.
"We also assume margin declines continue as revenue from the company's strategic initiatives grows, which is lower margin than programmatic and e-commerce. This results in a 29% and 31% cut to our FY27 and FY28 EPS estimates, respectively."
RBC Capital Markets upgraded Berkeley and Barratt Redrow on Wednesday as it took a look at UK housebuilders.
The Canadian bank said that besides 'Help to Buy', it was difficult to see what will drive housebuilder share prices higher in the near term.
"Asset valuations are back to levels last seen in the Great Financial Crisis and without a powerful catalyst we don't see how to get valuations 'back to the future'," it said. "The war in Iran has turned newsflow negative lengthening the handle of the hockey stick of recovery. The value proposition is clear, but until newsflow turns positive there is limited fear of missing out."
RBC said it continues to believe Persimmon will outperform, Taylor Wimpey will reward the patient and Crest Nicholson will continue its turn around. All three were kept at 'outperform'. Persimmon's price target was cut to 1,350p from 1,750p, while Taylor Wimpey's was cut to 120p from 155p and Crest Nicholson was reduced to 155p from 215p.
RBC upgraded Barratt Redrow to 'outperform' from 'sector perform' on valuation grounds and lifted its price target on the stock to 350p from 425p, and upgraded Berkeley to 'sector perform' from 'underperform' due to the "robustness" of its business model, keeping the price target at 3,900p. However, the bank said it sees "darker days ahead" for Vistry, which it kept at 'underperform' and slashed its price target to 180p from 385p.