Informa boosted by Investec upgrade

Informa got a boost on Tuesday after Investec upgraded the stock to ‘buy’ from ‘hold’ as it integrated the accretive Penton acquisition and £715m rights issue.

The brokerage said that while a £1.2bn deal adds risk, this is mitigated by the close business fit and Informa/Penton interaction over the years. “We thus see Penton as a ‘big bolt-on’,” it said.

Investec said Informa’s management knows Penton well, with frequent interactions over a number of years across the business, especially at the top level.

“The skew to overseas (and more $) earnings, plus a systematic plan to boost growth/return on invested capital, make us fundamentally positive.”

Investec said the Penton deal will add US exposure and skew the group more to big events, boosting an attractive vertical further within Informa.

The brokerage cut its price target on the stock to 706p from 728p to adjust for the deal and rights issue.

The Penton integration, cost savings and the rights issue led Investec to up its earnings per share estimates for full-year 2017 and 2018 to 45p and 48p from 43.7p and 46.2p respectively.

At 0955 BST, Informa shares were up 3.1% to 681.50p.