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. 

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

This morning the £56m capitalised company reported its final results for the year to the end of December 2023, showing a 23.4% profit increase on the back of a just 6.8% better turnover. 

The figures and current year outlook should be good enough for investors to realise how under-rated its shares are at the current 41p. 

The Business 

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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. 

Final Results 

For the 2023-year group revenue is reported to have grown by 6.8% to £80.2m (£75.1m), while adjusted EBIT improved by an impressive 31% to £12.0m (£9.2m). 

The group’s adjusted pre-tax profit was 23.4% better at £9.7m (£7.9m), while earnings were up 21.1% at 9.7p (7.9p) per share. 

CEO Nick Waters stated that: 

“We delivered a solid performance in 2023, expanding relationships with clients, progressing our business transformation programme and continuing to build scale in the US, the world’s largest advertising market. 

Despite the more challenging market conditions the business has shown great resilience, increasing revenue and delivering a strong operating margin performance at 15.0%, an improvement of 2.8 percentage points from 12.2% in 2022.  

This reflects the operating efficiencies we have achieved so far as part of our transformation programme and cost management, as well as continuing growth in our higher margin Digital Media Solutions business.” 

Current Year Outlook 

2024 will be an important year for the group’s transformation, as it continues to enhance its use of technology, while changing its operating model and improving its ways of working.   

These measures will help to further improve the group’s client service, to ensure greater efficiency and increase its medium and long-term profitability, giving its management confidence to expect further profitable progress in 2024. 

Broker’s View – 71p Price Objective 

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

His estimates for the 2024 results 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. 

I would estimate that the shares of Ebiquity could well rise 50% in due course and still look attractively priced. 

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