Ebiquity's (LON:EBQ) interims are as indicated in July’s update, with good performance from the Media and Analytics & Tech segments. The strong new business pipeline underpins improving revenue and profit in H218 and our forecasts are unchanged. Management expects the Phase 2 CMA investigation on the Intel (NASDAQ:INTC) disposal to be concluded by this December. Once the situation is resolved, the shares can be appraised on fundamentals again. The continuing structural shifts in marketing should make for a fertile trading environment for an independent, trusted partner to guide decision-making. The current rating reflects uncertainty, rather than value.
Good pipeline and H2 bias to profits
Transparency remains a major concern to brand advertisers and is partly fuelling increased levels of in-housing of functions such as media buying. Measurement of ROI is becoming more sophisticated and taking into account broader business aspects than straightforward returns on digital advertising campaigns. The spate of media reviews by larger brands is also positive. Ebiquity has been stepping up its offering in contract compliance, advanced analytics and tech advisory, spending £1.5m in the period, implying a short-term cost to margin. Advanced analytics and Tech has good momentum (like-for-like revenue growth near-30%), especially in the UK where management reports significant new business wins. The Media business in the US similarly reports strong trading, while a new leadership team in China should help drive improved H2 profitability.
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