Barclays upgrades Informa, sees good entry point

27th Apr 2016 09:21

(ShareCast News) - Barclays upgraded Informa to 'overweight' from 'equalweight' and lifted the price target to 750p from 630p, saying the recent underperformance provides a good entry point.Informa shares have underperformed the FTSE 100 by 8% since the start of this month, but outperformed by 6% since the start of the year.Barclays noted that in that time, the company has seen IBES consensus 2016E earnings per share increase 5%, while the downgrade for FTSE 100 EPS has been 10%."We think Informa has been caught in a rotation out of 'quality' names, whereas we see it as a 'value' stock with positive EPS momentum. We have good confidence in Informa's earnings in 2016, with a decent start to the year and a pipeline of possible bolt-ons," the bank said.It sees potential for upgrades and a re-rating as the market becomes increasingly confident in the company's turnaround.Barclays argued the next step for Informa was to enhance organic growth further and deliver good EPS growth year-in, year-out."In our view, the ultimate goal is to catch up with RELX, trading on 18.5x 2016E price-to-earnings versus Informa on 14.4x. Informa is not there yet, but we believe the direction of travel points to a multi-year re-rating."At 0926 BST, Informa shares were up 1.5% to 670p.