Ebiquity offers exposure to the recovery in marketing services

The transition into an independent global media marketing consultancy took its final shape in the finals to December 2019, which were reported last month. Now, under the new CEO, Ebiquity (LON:EBQ) sold its commoditised Advertising Intelligence business (Adintel) to Nielsen for around £20m in January 2019.

The outlook contained Covid adjusted caution and the proposed dividend of 0.85p was postponed. Results were broadly in line, with revenue down 1% to £68.7m and the underlying PBT was up slightly to £5.3m with EPS of 3.6p. This would give a P/E of 8x and a 2.8% yield, however the accounts are mudded by eight kitchen sink items the largest is the £6.8m Goodwill impairment from closing a US subsidiary.

The ongoing higher margin consultancy practice covers; Media Management, Performance and Contract Compliance. The new CEO reported that business operations and service delivery are being maintained at a normal level during Covid. Revenue, however, was impacted as some clients and sectors hibernated and forward guidance was withdrawn.

The media market continues to undergo significant changes as it shifts from traditional media into the increasingly complexity of the digital media value chain.

This provides the Consultancy business with opportunities to address advertisers’ requirements and to map into the key stages of client’s media cycles using their global media expertise. It’s clients are 70 of the world’s 100 leading advertisers including Sony, L Oreal and Subway. Few can doubt these companies demand as marketing strategies are reappraised.

Initially the CEO’s focus is on improving the profitability by increasing efficiency and expanding the range and value generated by the consultancy. The acquisition of complementary Digital Decisions helps the measurement and advisory services and further deals can be anticipated. Profits to the year-end December 2020 were forecast a £6.5m for a P/E of 6x and a 3% yield and cost reductions have been made. The shares are tightly held with over 60% with institutions; Artemis holding 19%, Canaccord on 13% and JO Hambro with 12%. After the finals Directors brought share at up 30p.


There is strong cash conversion and net debt is down to £5m in an agreed Banking facility.

Trading Strategy

EBQ are comparatively cheap and set to be re-rated, which could be helped by the AGM statement at the end of this month. Buy

Ebiquity (LSE: EBQ)

29.5p (29-30p)

Mkt Cap: £24m

Next Announcement AGM Friday June 26th – then Interims in September

This tip is from the OGM Newsletter by Jon Levinson and Andrew Hore