JP Morgan has upgraded its outlook on online retailer THG.

The Manchester-headquartered group returns to the FTSE 250 tomorrow (September 24) on the back of positive half-year results.

Now JP Morgan has raised THG’s stock from ‘underweight’ to ‘neutral’ – sparking a 4.5 per cent increase in the retailer’s share price.

Underweight means they expect the stock to perform worse than the overall market while neutral stock is predicted to perform in line with the market.

THG set for shock return to FTSE 250

THG’s share price currently stands at just over 38p with a market cap of £532m.

The figures are up from 25p and £352m respectively at the start of June – but are still well down from THG’s IPO valuation of £5.4bn in 2020.

In an analyst note, JP Morgan said: “We see the tide turning post a period of strategic evolvement.

“Having been sceptical on the equity story for past three years, and maintaining our UW (underweight) through the last two, we close our cautious stance on THG and upgrade to neutral, with the share price having meaningfully corrected over the period, while at the same time we see first signs of improved performance following a period of extensive strategic evolvement.

“Operationally, trading momentum is building (Q2 organic growth +0.9%, JPMe +4.6% in H225) with the business benefitting from an enhanced business model in both Beauty (disposal of certain operations, own-brand investment and retail territory prioritisation) and Nutrition (Myprotein rebrand, offline retail expansion and Asia model evolution) which we see setting up for sustainable and accelerated growth into year-end and FY26.

THG doubles its money by selling Claremont for £103m

“Strategically, the THG Ingenuity demerger has focused management on core operations, and together with recent disposals (Claremont), asset optionality and cash generation (£28m FCF in FY26E), we see an improved balance sheet position and path to net cash in FY29E.

“With shares trading down 18% through 2025 (-45% on a 2-year view), the stock trades 6.7x EV/EBITDA 26E – we argue valuation is now balancing execution risk ahead with upside on operational delivery.”

At the start of 2025, THG demerged its loss-making Ingenuity technology arm, while in August it sold Claremont Ingredients to Nactarome Group for £103m to reduce its debt.

The sale has prompted speculation that CEO Matt Moulding will look at further disposals  to reduce net debt to zero.