Headwinds in the US affected overall performance in FY17 and we pare back FY18 EPS forecasts by 5%. However, remedial action has been taken, activity in H2 has picked up and we continue to forecast an acceleration in like-for-like revenue growth in FY18. Ebiquity’s (EBQ’s) (LON:EBQ) growth profile should be further improved by the proposed divestment of AdIntel, paving the way for an unwinding of its discount to the peer group. An in-line EV/EBIT rating would point to a value of around 90p.
Pick-up in growth in H2
As indicated in the pre-close trading update, group like-for-like revenue growth of 0.8% continued to be affected by headwinds in the US with a consequential impact on operating margins. In MVM (+9.3% revenue growth), this was more than compensated for by an excellent performance from its contract compliance business, FirmDecisions, which continues to benefit from increasing demand for media transparency. However, within MPO, despite a strong performance outside the US, client churn in the US-based Multi-Channel Analytics (MCA) practice resulted in a 2.3% decrease in revenues. In MI, revenues decreased by 0.9%.
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