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Ebiquity sells market intelligence arm to focus on growth opportunities elsewhere
Marketing analytics firm Ebiquity (EBQ:AIM) is looking more streamlined having agreed the £26m sale of its AdIntel division to global consultancy Nielsen (13 Feb).
This business formed the bulk of the group’s Marketing Intelligence operation – which aids firms in understanding their market and what other companies are spending cash on. Chief executive Michael Kargs tells Shares this has increasingly become a ‘commoditised’ area.
The proceeds from the deal are expected to reduce Ebiquity’s debt-to-earnings ratio from 2.1 to 1.0-times.
Recent management focus and resources have been centred on the company’s higher margin and faster-growing Media Value Measurement (MVM) and Marketing Performance Optimisation (MPO) arms.
These apply technology to help companies understand the effectiveness of their marketing and advertising to help ensure promotions have a greater impact in the future.
Although these businesses have significant potential, a trading update accompanying news of the disposal confirmed previous guidance that both MVM and MPO have underperformed in the US.
Numis, which has a ‘buy’ rating and 145p price target on the stock, says the problems across the Atlantic are ‘being addressed by new leadership, though margins were impacted in 2017’.
As such it has trimmed earnings per share forecasts for 2017 from 10.5p to 9.7p; and for 2018 from 9.4p to 8.3p.
Profitability already faced some pressure thanks to a programme of significant investment which is set to peak in 2018. (TS)