Hi Carl,
There’s been no news that we can find which in itself can often be an even more bullish scenario.
- The stocks rallied almost +20% from this month’s low but we must caution its EOFY which often throws up some large moves on the stock level.
However, the stock looks good, and we wouldn’t be surprised to see a test of its 2026 high, around $3.20, supported by its ~6.5% fully franked yield – the stock’s forecast to pay an 8.5c fully franked dividend in early September.
From a risk perspective, the key risk we see for this business is that it remains exposed to a structurally challenged part of the market: print, catalogues, direct mail and physical marketing collateral. IVE has done a good job diversifying into data, creative, integrated marketing and outsourced communications, but we do have some concern that a meaningful part of the revenue base still sits in areas where volumes can be pressured by digital substitution, cost-cutting by retailers, and weaker advertising spend.
We certainly don’t think print advertising disappears overnight – it won’t- but that revenue growth becomes harder to generate as clients continue shifting budgets toward digital channels. In that environment, IVE has to keep offsetting volume pressure through cost control, market-share gains, acquisitions and higher-value services.
That is why the balance sheet matters. The company is still carrying debt, with 1H FY26 net debt of $172.3m and gearing of 1.59x pre-AASB 16 EBITDA, although management has guided that net debt should fall below 1.5x by 30 June 2026.
So, in short: structural revenue pressure is the main risk; leverage amplifies it if earnings disappoint. The bull case is that IVE keeps managing the transition well, maintains strong cash conversion and continues paying an attractive dividend. The bear case is that print-related weakness accelerates faster than the newer businesses can offset.
We think the bull case is more likely, but, there are risks around it, so position sizing is important. We would not hold more than ~5% in this stock.
