GlobalData PLC (LON: DATA)  

GlobalData PLC is an FTSE AIM 100 index listed market data intelligence provider to the world’s renowned industries. It has been serving over 4,000 clients, which includes companies across various industries, financial institutions, government organizations and professional service firms. The Company intends to cater through long-term strategic partnerships through its “gold standard” offerings.

Recent trend of Dividend Payments

DATA will pay a final dividend of 13.20 pence per share attributable for FY21 on 29 April 2022 with an ex-dividend date of 31 March 2022, taking a full-year dividend to 19.30 pence per share. In comparison, the Company had paid a total dividend of 17.0 pence per share for FY20. Thus, the total dividend growth came out to be around 14%.

(Source: LSE; Analysis done by Kalkine Group)

Growth Prospects

• Strategic Acquisitions: The Company had completed two strategic acquisitions, LMCA Holdings Limited and LMCI Holdings Limited, during Q4 FY21. Moreover, these acquisitions will add drug pricing data, as well as other critical Life Sciences data and analysis to the existing world-class pharmaceuticals intelligence.
• Strong Operational Progress: The attractiveness of the information services has given the potential of delivering strong financial and operating performance going forward. Meanwhile, the introduction of single Platform operating model is likely to accelerate organic and inorganic growth opportunities.

Key Risks

• Ukraine Tension: The mounting concern over the Russian invasion in Ukraine can continue to weigh on the equity market.
• Record UK Inflation: The annual rate of UK consumer price inflation reached 5.5% in January 2022, the highest since March 1992. Thus, it can adversely impact the London equities.
• Other Significant Risk Factors: The Company’s debt level has increased recently, which can also create a liquidity risk. Further, the Group operates in highly competitive yet fragmented markets.

Key Fundamental Statistics & Shareholding Pattern of GlobalData PLC. 

Danson (Michael Thomas) is the most significant shareholder as it holds nearly 75.77 million shares as of 31 December 2021.  

FY21 Financial Highlights (for the 12 months ended 31 December 2021, as of 28 February 2022)

(Source: Company Filings)

• Revenue Growth: The Company’s revenue grew by around 6% during FY21 when compared with the prior-year levels.
• Profitability: The profits before tax jumped 14% and reached £32.6 million, an increase from £28.6 million in 2020.
  

Financial Ratios (H1 FY21)

Share Price Performance Analysis 

(Source: Refinitiv; Analysis done by Kalkine Group)

On 01 March 2022, at 09:44 AM GMT, DATA’s shares were trading at GBX 1,290.00, down by around 1.53% from the previous day closing price. Stock 52-week High and Low were GBX 1,700.00 and GBX 1,153.00, respectively.

From a technical standpoint, DATA is hovering around the lower Bollinger band, indicating an upside potential in the stock price. Moreover, the 14-days RSI of ~28.73 confirms an oversold position.

Valuation Methodology: Price/Earnings Approach (FY22E) 

Business Outlook

The Company has produced strong FY21 business performance with significant growth in top-line revenue, dividend payments and bottom-line profitability. The strategic progress made through M&A (acquisitions of the Life Sciences business of IHS Markit, LMCA Holdings Limited and LMCI Holdings Limited) in the Q4 FY21 shall augment the solid organic growth. However, the net debt had shown an increase during FY21 because of investment in M&A. Meanwhile, DATA aimed to achieve strong organic revenue growth and continued margin improvement in 2022. In a nutshell, the Company would keep generating long term returns for the shareholders with an improved forward revenue visibility and strategic acquisitions pipeline.

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the recent strategic acquisitions, robust profitability, strong growth dividend payments, decent top-line business during FY21, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on GlobalData PLC at the current market price of GBX 1,290.00 (as of 01 March 2022 at 09:44 AM GMT), with lower-double digit upside potential based on 39.42x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios. 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

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