YouGov PLC (LON: YOU)

YouGov PLC is an FTSE AIM 100 Index listed international data and analytics company. The Group has one of the world's largest research networks, with 37 offices across the globe. The Company provides a data-led offering that supports and improves a broad spectrum of marketing activities of a customer base, including media owners, brands, and media agencies.

On 22 March 2022, YOU will release the H1 FY22 results. 

Recent trend of dividend payments

YOU had paid a final dividend of 6 pence per share attributable for FY21 on 13 December 2021, while the ex-dividend date was 02 December 2021. It represented an increase of around 20% from the FY20 levels, boosted by the continued confidence in the business model and financial position.

(Data Source: LSE Website, Research done by Kalkine Group)

Growth Prospects (also encapsulates pre-close trading update released on 28 January 2022)

• Strategic Initiatives: The transformation of the sales structure over the past year had benefitted YouGov in adding several strategic clients. On the geographic front, the US and Mainland Europe remain the key growth markets.
• Acquisition Benefits: With the acquisition of LINK Marketing Services AG, the Company aims to penetrate the Switzerland market. Moreover, the Company would develop syndicated data products in Switzerland and leverage LINK's strong client relationships to boost subscriptions.
• Technological Investments: YouGov had made significant investments of £11.7 million towards the expansion of panel into 15 new markets. Moreover, it led to an increase of around 53% in the number of registered members to 17.5 million during FY21.

Key Risks 

• Federal Reserve Meeting: The latest Federal Reserve Meeting indicated an interest rate hike by March 2022. Thus, it may cause a significant decline in Global Equities.
• Sluggish UK Macroeconomic Indicators: The UK Composite PMI fell marginally to 53.4 in January 2022 from 53.6 in December 2021, while the UK consumer price inflation breached a nearly 30-year high of 5.4% in the 12 months to December 2021.
• Legal Risk: Non-compliance with data protection or privacy legislation, such as EU GDPR, could lead to significant penalties.
• Cyber Threat: Inadequacy of IT infrastructure or system failure increases the chance of cyber-attacks. Any such occurrence from an external or internal source could adversely affect the operations and reputation of the Company.
  

Key Fundamental Statistics & Shareholding Pattern of YouGov PLC.

Liontrust Investment Partners LLP is the most significant shareholder as it holds nearly 10.97 million shares as of 31 December 2021.

FY21 Financial Highlights (for the twelve months ended 31 July 2021, as of 19 October 2021)

(Source: Company Filings)

• Decent Revenue Growth: YOU had shown decent revenue growth of around 11% in reported terms to £169.0 million for FY21.
• Robust Profitability: The Company had reported a 21% growth in the adjusted profit before tax during FY21.
• Strong Cash Conversion: The Company had reported a cash conversion of around 123% during FY21, while it was around 104% for the prior year’s period.

Financial Ratios (FY21)

Share Price Performance Analysis

 (Source: Refinitiv, Research done by Kalkine Group)

On 01 February 2022 at 08:45 AM GMT, YOU’s shares were trading at GBX 1,160.00, same as the previous day closing price. Stock 52-week High and Low were GBX 1,600.00 and GBX 940.00, respectively.

On a daily chart, YOU's price is sustaining between the middle and lower Bollinger bands. The 14-days RSI stood at ~28.21 levels. Hence, there could be an uptick in the stock price in the near term.

Over the last two years, YOU’s stock has delivered a positive return of ~74.81%. Also, it has outperformed the FTSE All-Share Media index with a return of about 5.96% and the FTSE AIM 100 index with a return of about 7.09%.

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Business Outlook

YouGov has kickstarted FY22 on a bright note with a healthy sales pipeline and continued strong momentum. The Company expected growth across all segments and geographies based on the revival of economic activities and solid demand for more tactical, fast turnaround projects. Meanwhile, the Company would enhance activation capabilities and publisher partnerships with the acquisition of Rezonence. YouGov has a solid balance sheet with zero debt, and an increase in cash balance provides a solid platform to grab opportunities for expansion and gain market share. Overall, the Company has expected FY22 financial performance to remain slightly ahead of the expectations with the current long-term strategic growth plan.

Considering the consistent dividend payments, solid profitability, better liquidity & leverage position of the business than the industry, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on YouGov Plc at the current price of GBX 1,160.00 (as on 01 February 2022 at 8:45 AM GMT), with lower-double digit upside potential based on 53.02x 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 unfavourable movement in the stock prices.

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