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Re-rating at Informa "long overdue", says Bank of America
(Sharecast News) - Bank of America has said it sees 40% upside in the share price of Informa after raising its target price for the publishing, business intelligence and exhibitions group on Thursday. The bank lifted its target from 1,020p to 1,050p and reiterated a 'buy' stance, giving the stock a small lift, up 1.3% at 740.4p by midday GMT.
In terms of Informa's enterprise value-to-EBITDA valuation, the stock trades on an "inexpensive" 11 times multiple on 2024 estimates - the widest discount to sector peers RELX and Wolters Kluwer in over five years.
"For this, an underappreciated faster growth profile vs. pre-COVID, resilient c.13% profit growth in 2024E, and scope for further buybacks/M&A does not look fully priced in," Bank of America said.
The bank said that, given the company's track record and growth drivers, it should be able to meet the top end of adjusted EBITDA guidance of £945-965m this year.
"We are upbeat on another year of above-normal growth for events, buoyed by diversified/ attractive geographic exposure (e.g. Saudi Arabia), leading brands and scope for further price/yield recovery which aids margin delivery and de-risks the growth profile. M&A remains a potential catalyst, and we still see scope for buybacks to potentially be extended."
Meanwhile, last week's announcement to combine Informa Tech's digital businesses with TechTarget to create a US-listed New TechTarget, in which Informa holds a 57% stake, should provide more upside, Bank of America said.
"We think TechTarget adds some complexity, but also impetus to the long overdue re-rating."
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