Market Context
The United Kingdom small‑ and mid‑cap (SMID) Internet sector has underperformed in 2026, declining 7% year‑to‑date, while the broader FTSE 250 index posted a 5% gain. This divergence has created a volatile, dispersion‑driven environment for investors.
Auction Technology Group (ATG)
JPMorgan maintains a positive stance on Auction Technology Group ahead of its July 23 trading update. The firm cites a de‑risked second‑half delivery outlook as execution improves under the leadership of newly appointed CEO Duncan Painter. Management is expected to reaffirm FY2026 guidance with a more second‑half‑weighted margin profile, supported by the anticipated synergies from the Chairish acquisition, additional cost‑saving actions, and an improving product mix that should drive higher‑margin commission growth.
JPMorgan forecasts FY2026 revenue of $249 million and adjusted EBITDA of $86 million, implying a 34.6% EBITDA margin, broadly in line with consensus estimates. Despite ATG shares having risen 54% year‑to‑date—far outpacing the FTSE 250’s 5% gain—the valuation remains attractive at 7.5 times enterprise value to EBITDA for FY2027 and an estimated free‑cash‑flow yield of approximately 8% for FY2027. Strong cash generation and ongoing deleveraging are highlighted as supporting balance‑sheet flexibility and potential for further earnings upside and re‑rating as execution confidence rebuilds. The company reported strong financial performance for the first half of 2026, with notable improvements in both revenue and profitability metrics.
YouGov
JPMorgan views YouGov as being at an inflection point, with the investment narrative shifting from near‑term pressure to a clearer medium‑term value‑creation agenda. This shift is driven by the board’s strategic review of the Shopper business and the rollout of a three‑wave Value Delivery Plan. The firm notes that YouGov’s valuation remains at a significant discount, trading at 4.4 times enterprise value to EBITDA for FY2027, a multiple that does not yet reflect improving visibility around Shopper options and potential shareholder returns following refinancing.
For FY2026, JPMorgan projects revenue of £395 million, representing a 1.6% year‑over‑year increase, while adjusting the profitability forecast down 2% to £53 million adjusted operating profit, reflecting a more conservative view on early benefits from the Value Delivery Plan. The August trading update is expected to address progress on refinancing and the timing of any potential shareholder returns.
Analyst Takeaway
JPMorgan’s recommendations highlight two distinct opportunities within a sector that has broadly underperformed. ATG offers upside through improved second‑half execution, synergies, and a strong cash‑generation profile, while YouGov’s discounted valuation and strategic initiatives suggest medium‑term value creation once refinancing and Shopper‑related initiatives materialise.