On Monday, UBS increased its price target on Informa Plc (INF:LN) (OTC: IFJPY) shares to GBP 9.47, up from GBP 9.33, while keeping a Buy rating on the stock. The firm identifies Informa as a top pick for the year, highlighting four key areas where the company could outperform expectations and see its valuation rise.
Informa has set a revenue growth target post-2024 of over 5%, a figure UBS believes could be exceeded due to untapped pricing potential in Informa's events sector. Additionally, while Informa's guidance suggests margins will hold steady at around 30%, UBS predicts that higher growth rates could improve operating leverage, thus increasing margins.
The analyst also points to the valuation of TechTarget (NASDAQ:TTGT), a company covered by UBS's SMID team. They have recently set a valuation of $45 per share for TechTarget, which is significantly higher than its current share price of $32. This valuation could represent an additional 40p per share for Informa investors in an optimistic scenario.
Regarding leverage, UBS's base case assumes that Informa will have zero net debt by 2028. However, if the company were to maintain leverage at 1.5 times consolidated EBITDA, at the lower end of their new guidance, and proceed with share buybacks, this could translate to a value of about 20% of Informa's current market capitalization.
Informa's current trading valuation stands at a 13x 2025E PE ratio, or a 7% estimated free cash flow yield, which UBS finds attractive. This assessment underscores UBS's positive outlook on Informa's stock performance potential for the upcoming period.
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