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Informa boosted by Morgan Stanley upgrade to 'overweight'

By Michele Maatouk

Date: Tuesday 19 Mar 2019

(Sharecast News) - Morgan Stanley upped its stance on shares of events company Informa to 'overweight' from 'equalweight' on Tuesday as it highlighted decent trading and a lowly rating versus peers.
MS noted that following its merger with UBM, Informa shares hit 850p but then performed poorly on the back of a disappointing first half, with weaker margins in all four divisions, and concerns about the cyclical nature of the exhibitions business and its exposure to the Middle East and China.

However, the shares have performed better into 2019, it said, as the FY18 results showed the rate of margin decline halving from H1.

Looking ahead to this year, the bank cited a number of positives, including an improvement in the margin story as it's the first year of major UBM cost savings. In addition it said sentiment on global trade appears to be improving, which is good for the company's exhibitions business, which represents 51% of sales and 55% of EBITA.

"In particular, sentiment on China (circa 11% of Informa revenue and circa 15% of EBITA) has improved, while in the US Informa's Exhibitions appear to be trading and re-booking well," the bank said.

Meanwhile, the academic division looks robust, with the smaller size and humanities and social sciences focus of Taylor & Francis shielding it from the issues impacting Elsevier.

Morgan Stanley has an 840p price target on Informa.

At 1500 GMT, the shares were up 3.7% to 748.20p.

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