Liberum downgrades UBM and upgrades Informa as 'best way to play events'
After Informa's recent impressive performance, Liberum said the stock was its preferred way to play the events sector, upgrading it to 'buy' from 'hold' and doing the reverse for rival UBM, where there are "questions" over why it has not performed better.
Liberum, which cut its target price on UBM to 760p from 840p with its new 'hold' rating, said UBM "should be doing better" given the strong growth in events and its assets and analysts "feel uncomfortable" with the company's method of calculation of underlying revenue growth, which "feels like an attempt to ensure that UBM can state its underlying revenue growth is in line with the industry".
The chances of UBM being acquired "are probably fading", which "might prove to be entirely wrong" but no obvious buyer was apparent, with RELX clear in its recent presentation that it is not focused on major acquisitions in events and Informa "would be wary of diluting its organic revenue growth when it is outperforming the industry".
Analysts, which lifted their target price on Informa to 855p from 675p, is "delivering on its promises", with business intelligence back to positive growth, events showing strong growth, academic just about positive and 'Knowledge and Networking' trends improving.
"Given the wider concerns over media, that should ensure that Informa benefits from being perceived as a safe haven."
Recognise that Informa bolsters its events organic revenue growth by stripping out the more challenged parts of the overall industry, such as conferences and smaller shows into in K&N division, "yet there is no doubt that, even on a combined metric, with K&N improving and with the larger events doing well, Informa’s events business is doing well."
Previous concerns over Academic, that the business was of relatively low quality and that its academic journals business may struggle, "does not look to be the case currently".