IPH -thoughts after the large swings this week
Hi Guys what are your thought on IPH now, seems to have decent growth prospects and pays good income but share price is lagging, not sexy enough? what do you think?
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Answer
Hi Peter,
Intellectual property services company IPH has been trading in the $6.50-7.20 for the last 4-weeks but unfortunately for share holders its been a tough year with the stock correcting~37% from its 2022 high. This weeks trading update was slightly ahead of consensus but it hasn’t excited investors at this stage.
Apart from potential M&A, we believe the main driver for a PE re-rate will be stabilisation/improvement of A&NZ market share to restore investors confidence in what the sustainable organic growth outlook actually is. They also made a point at their AGM this week to say they remain in active discussions on further potential transactions, and continue to assess further M&A in Canada and other regions.
- On a 5% yield over the next 12-months and the current PE of 15.5x, there is not huge upside factored into the current price making it relatively attractive below $7 over the medium term.
