After last Thursday’s profit warning by YouGov (LON:YOU), the international online research data and analytics technology group, its shares almost halved from the 838p they reached during the previous day’s trading, to close at just 440p.
As if that was not bad enough, they fell again yesterday to as low as 412p at one stage, before closing at 439p.
Almost puzzling many investors who would have thought that the UK General Election, creating a veritable plethora of daily poll announcements, would be creating massive upside for the group.
Now the question is whether its shares, which were at 1,230p each in early February this year, still look overpriced, and do they have further to fall?
The Business
The £511m capitalised company, which was founded in 2000 by Stephen Shakespeare and former Chancellor of the Exchequer Nadim Zahawi, declares that its mission is to offer unparalleled insight into what the world thinks.
Considering that its shares were trading at over 1,600p a couple of years ago – the reaction would be that perhaps investors have better insight than the company’s management.
The group claims that its innovative solutions help the world’s most recognised brands, media owners and agencies to plan, activate and track their marketing activities better.
The company claims that its purpose is to give the world a voice through its global community by collecting, measuring and analysing their opinions and behaviours and reporting the findings accurately and free from bias.
It boasts of having one of the world’s largest research networks, with operations in the UK (with 2 offices), the Americas (8), Europe (15), the Middle East and India (4) and the Asia Pacific (8).
The core of its platform is an ever-growing source of connected consumer data that has developed daily over the last couple of decades or so of operation.
The group, which refers to it as living data, is drawn upon the detailed understanding of its 27m registered panel members to deliver accurate, actionable consumer insights.
The group has over 4,300 clients worldwide and claims to be the most quoted market research source worldwide.
Last Thursday’s Trading Update
The company reported that following the half-year results, it has seen lower sales bookings than anticipated, and as a result it now expects reported revenues for the year to end July will be some £324m-£327m and that it now expects full-year adjusted operating profit to be £41m-£44m.
Analyst View
Analyst Jessica Pok at Peel Hunt considers that the group is continuing to address its issues, but that the statement was very disappointing.
She stated that she was expecting a downgrade but that it was larger than she expected.
“YouGov has been impacted by slower client spend and intensified competition for data products.
Despite these challenges in the short term, the company is addressing the issues, and is focusing on investment in data product upgrades and artificial intelligence, sales organisation enhancement, and cost base reduction.”
The analyst retained her Buy on the group’s shares, while keeping her Price Objective of 1,500p on the equity.
The average of the consensus of six analysts that follow the group suggests that the shares could well Outperform, with Peel Hunt’s 1,500p being the highest price expectation, while the lowest is now 370p – with the average being 922p.
My View
On the face of it, I would have thought that this group’s shares are still overpriced and could so easily fall further, ahead of the end of July when we should get the Year End Trading Statement.
They are currently trading at around 441p.