After the recent spate of global elections, it would be totally understandable for investors to consider that the pollster companies were making a fortune.
However, it may not be that way at all.
For instance, take a look at YouGov (LON:YOU), the group that describes itself as the #1 most-quoted market research source worldwide, being trusted to provide unparalleled into what the world thinks.
Pollsters do not always get it right – that is a certainty – but my goodness they do gain significant prominence at election-time.
So, what about YouGov?
Not Just About Elections
With operations in the UK, the Americas, Europe, the Middle East, India and Asia Pacific, the business has one of the world's largest research networks.
With such a geographic spread, it is an international online research data and analytics technology group, whose declared mission is to offer unparalleled insight into what the world thinks.
The innovative solutions provided by the group help the world's most recognised brands, media owners and agencies to plan, activate and track their marketing activities better.
It has some 29m registered panel members giving their regularly sought views on products and services, as well as international and political issues.
YouGov data is regularly referenced by the global press, and we are the most quoted market research source in the world.
The 2024 Final Results
The year to end-July reported revenues up 30% at £335.3m (£258.3m), while the group’s adjusted pre-tax profits were down 21% to £45.0m (£57.2m), knocking its adjusted earnings lower to 29.4p (41.0p), but with a 3% increased dividend of 9.0p (8.75p) per share.
When the group declared those results, on Wednesday 6th November, CEO Steve Hatch stated that:
"FY24 has been a year of transition, challenge and change.
We have made significant strategic progress in the financial year.
We completed the acquisitions of CPS and KnowledgeHound which strengthen our product offer and technology as well as increasing our addressable market.
Consistent with this, post-period end we acquired Yabble, which will transform our Data Products segment using generative AI.
The macroeconomic environment remained challenging across the wider market research industry and for YouGov, while internal execution also contributed to the challenges we faced.
We acted quickly over the summer and I am confident that we have put the right initiatives in place as we focus on the execution of our long-term strategic plan.
Our clients continue to value the quality of our products and services, this is reflected by our high renewal rates and strong customer relationships.
As we enter FY25, we anticipate that momentum will build throughout the year, weighted towards the second half, as the benefits of our cost optimisation plan and new commercial leadership are realised.
We consequently expect YouGov to achieve growth for FY25 in line with current market expectations, and remain confident in the Group's ability to deliver on its long-term ambitions."
The group’s shares, which were as high as 1240p in February this year, but collapsed on a profit warning in June, were down to 453p on the 2024 results.
Professional Comment
Readers may well remember that I reported during the summer that Julian Fosh and Anthony Cross, Managers of the Liontrust GF Special Situations Fund, considered that it would take time to rebuild investor confidence in the company after its profit warning, but they remain invested.
At brokers Peel Hunt, analyst Jessica Pok has retained her Buy recommendation on the group’s shares, with a 720p a share Price Objective.
Rating the group’s valuation as ‘compelling’ she states that the group will need to show in January that its turnaround is on track.
Pok is looking forward to the January Trading Update to give evidence of the growth prospects going forward.
Some six analysts follow the company, all relatively bullish about the group’s prospects, with the lowest Price Objective being 470p, the highest 810p and the consensus being 675p.
In My View
Looking at the YouGov share price right now, at some 427p, I find it difficult to accept Pok’s Price Objective of 720p being at all possible within the next year or so.
However, this £512m-capitalised group has strong professional investor backing and it plays in a truly global marketplace – so much so that I am surprised that it is still an independent business and not already a subsidiary of a major Private Equity firm.
Ahead of its AGM on Thursday 5th December, its shares could prove to be a good recovery punt.
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