Insider: bargain hunting at bombed-out AIM share 

A Google TV executive who joined the YouGov (LSE:YOU) board 18 months ago has boosted her stake in the research data and analytics firm after it swooped for a generative AI insights business.

The £34,500 move by non-executive director Shalini Govil-Pai came as AIM-listed YouGov ended a difficult financial year by forecasting results better than it forecast in a June profit warning.

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Shares, which were recently below the 450p level seen in the early days of the Covid pandemic, have since recovered to end last week at 526p. They’ve also attracted a flurry of City support, with UBS believing current multiples make the stock “too cheap to ignore”.

Lifting its price target to 700p on Thursday, the Swiss bank highlighted the appeal of YouGov's cash generative business model, high quality data offering and new commercial approach. It said this should drive continued share gain from the larger, traditional players.

Govil-Pai, whose role as general manager and vice president of TV at Google brings technical and consumer expertise to the YouGov board, made her investment a day after the trading update at a price of 530p.

The shares were above 1,000p as recently as March but have halved amid the impact of shrinking corporate budgets and economic uncertainty on YouGov’s data products division, which is available to clients on a subscription basis.

A strategic review has since identified £20 million of annualised cost savings, while the company has focused on driving the transformation of its data products through AI capabilities.

It followed up on this commitment when last week it revealed the acquisition of New Zealand-based Yabble, which has been developing generative AI-powered tools specifically for the research industry since 2019. 

Yabble’s products are used by a range of Fortune 500 customers and major international brands, including some of YouGov's largest clients.

YouGov boss Steve Hatch said: "Generative AI is transforming the insight landscape and with the acquisition of Yabble, YouGov is strongly positioned to take advantage of this change.”

The City welcomed the £4.5 million acquisition and the trading update, which revealed the group now expects revenue of £327-£330 million and adjusted operating profit of £43-£46 million, up from £41-£44 million forecast in June.

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Peel Hunt, which has a 720p price target, said: “It has not been an easy year for YouGov: with a softer trading environment, increased competition and internal inefficiencies leading to the significant downgrade in June.

“Having said that, we now have a clear plan set out by management to address these issues, with the launch of the cost optimisation plan, improvements in the sales process and an acquisition to accelerate AI investment. This gives us confidence and underpins growth for 2025.”

The stock has traded at about a 60% discount to its historical average range, with UBS noting that the current forward price multiple is now almost in-line with IPSOS versus the long-standing 60%-100% premium previously.

The company was co-founded in 2000 by current chair Stephan Shakespeare and former chancellor Nadhim Zahawi as an e-democracy website to allow the public to vote on government whitepapers. It now has more than 4,300 clients and 1,800 staff.

The largest division is Custom Research, which offers quantitative and qualitative research and drove the group’s year-end outperformance amid the benefit of continued strong demand.

Deutsche Bank and Berenberg last week updated their price targets to 850p and 810p respectively, the latter having reduced its estimate from 1,200p to reflect more conservative assumptions to outer-year growth and margins.

Purchase follows upgrade

A strong trading update by Ramsdens Holdings (LSE:RFX) also inspired boardroom buying after two of its directors made investments totalling £20,000.

The buyers included former Debenhams and Northern Foods finance boss Simon Herrick, who has been a non-executive director of the retail and financial services business since 2017.

He made his purchase on Tuesday at a price of 204.3p, which compares with 190p before the Middlesbrough-based firm upgraded its guidance for the year to September.

AIM-listed Ramsdens revealed a strong performance in precious metals buying as more customers took advantage of the elevated gold price to help alleviate cost-of-living pressures.

The pawnbroking loan book has performed in line with hopes, while in retail jewellery the recent weakness in premium watches appears to have reversed.

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With the forex division also in line with hopes, Ramsdens now expects profits to be at least £11 million against City expectations of £10.5 million and last year’s £10.1 million.

Panmure Liberum increased its price target from 290p to 305p and said a price multiple of 7.5 times forecast 2024 earnings appeared too cheap when its closest peer H&T is at 6.9x.

The broker said: “Ramsdens has a more diversified operating model and has a better track record of delivering upgrades. A dividend yield of 5.8% is also much higher than the 4% average since listing.”