Date: Friday 01 Jun 2012
Peel Hunt has upgraded its rating for publisher and trade events group Informa from hold to buy, following the steep fall seen in the share price since April.
Adding to this downward pressure was Informa's first-quarter trading statement last week which prompted modest currency-related downgrades to estimates. The broker notes that Informa has a 46% exposure to the dollar with each one cent movement in the USD/GBP exchange rate having a £1.5m effect on earnings before interest, tax and amortisation.
"Despite the company’s exposure to the dollar and (to a lesser extent) the Euro, underlying trading within the Academic and Events units remains robust, with action being taken in PCI to remove low margin revenues," said analyst Patrick Yau.
"In our view, the falls in the stock price have now gone too far and we move our recommendation back to buy on the basis of solid underlying fundamentals, valuation and a 5.4% yield," he said. The broker leaves its 457p target price in place.
Despite the positive comments on Friday, shares were trading 0.94% lower at 337.9p by mid-morning.
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