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  • Writer's pictureMark Watson-Mitchell

Ebiquity – 70 out of the world’s top 100 advertisers can’t be wrong

To get ‘the best bang for your buck’ must be the most important need for companies marketing themselves across the globe.

And that is just where Ebiquity (LON:EBQ) comes in.

Over 70 of the world's top 100 advertisers select the group as their trusted independent media adviser.

Next Tuesday morning this £56m capitalised company will be reporting its final results for the year to the end of December 2023, they certainly should be good enough for investors to realise how under-rated its shares are at the current 41p.

The Business

The group provides media consultancy and investment analysis services in the UK, Ireland, North America, Continental Europe, and the Asia Pacific.

It offers analysis and advisory services in the areas of media management, media performance, marketing effectiveness, technology advisory, and contract compliance services.

Its set of technologies harness the power of data to provide independent, fact-based advice, enabling brand owners to perfect media investment decisions and improve business outcomes.

The company is a data-driven solutions company helping brand owners drive efficiency and effectiveness from their media spend, eliminating wastage and creating value.

Latest Trading Update (12th March)

For the 2023-year group revenue is expected to have grown by 7% to £80.2m (£75.1m), while adjusted EBIT is expected to have improved by an impressive 31% to £12.0m (£9.2m).

At that time CEO Nick Waters stated that:

"The Group continues to perform well against market and macroeconomic headwinds. 

Significant investment has been made in our transformation during the year and it is encouraging to see the benefits of this starting to take effect in improved operational efficiency. 

This, and the positive impact on our business mix of an increasing contribution from the higher margin Digital Media Solutions business, has led to significantly improved profitability.   

We expect to make further profitable progress in 2024."

Current Year Outlook

Despite still challenging conditions within the current media market, apparently this year has seen the group trading satisfactorily.

In fact, its Management has declared that the benefits of its growing Digital Media Solutions business, together with its recent transformation programme and cost controls, gives its confidence to expect further profitable progress in 2024.

Broker’s View – 71p Price Objective

Analyst Caspar Erskine at Liberum Capital rates the group’s shares as a Buy, having set a Price Objective of 71p per share.

His estimates for the 2023 results were for £82m sales, pre-tax profits of £9.5m (£8.0m), with earnings of 5.9p (5.4p) per share.

The current year could see £85m revenues, £11.5m profits and 6.2p earnings.

For 2025 he has already pencilled in £89m turnover, £14.0m profits and 7.6p earnings per share.

A consensus of three brokers following the company suggests that the average Price Objective is 92p per share.

My View – At Least 50% Upside

It was only two years ago that this group’s shares were trading at 71.50p.

By early February this year they had eased back to 31p, since when they have recovered to the current 41p level.

Considering the profits being predicted by brokers over the next couple of years as the group adheres to its strategic growth, its equity is massively undervalued at just £56m, especially when one realises that it could be producing profits of £14.0m by the end of next year.

Following next Tuesday morning’s results and subsequent upgrades, I would estimate that the shares of Ebiquity could well rise 50% in due course and still look attractively priced.





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