Berenberg sees huge upside for YouGov even after Tuesday's surge

10th Oct 2023 11:13

(Sharecast News) - Berenberg has slashed its target price for research firm YouGov by 18% but still sees significant upside after recent weakness in the shares.

YouGov's stock surged 19% to 824p on Tuesday after its full-year results, which showed a strong performance in spite of a difficult macro environment. As of Monday's close, the stock had fallen by around 32% since the start of 2023.

YouGov said revenues were up 17% in the 12-months to July 2023, up 9% on an underlying basis, with adjusted EBIT up 33%, with broad growth across all geographies. Meanwhile, the acquisition of GfK's consumer panel business remains on track and should close soon.

Berenberg has cut its target price from 1,640p to 1,350p, which still suggests a long way to go from current levels. The broker maintained a 'buy' recommendation.

Ahead of the results, the stock was trading at 15.6 times current-year earnings, which Berenberg said is a 60% discount to the five-year average valuation.

"We update our FY24E forecasts and now forecast 9% underlying revenue growth [previously 12.5%] and adjusted EBIT growth of 34% (inclusive of impact from acquisition). Our new price target is 1,350p, reflecting a higher [weighted average cost of capital] and updated forecasts," the broker said.

"We flag the recent weakness as a buying opportunity. YouGov is benefiting from structurally growing end-markets, and it continues to take share and deliver above market growth."