We base our valuation approach on both a SOTP as well as a DCF-based valuation, which we believe better captures the medium-term return to growth.

On the former, our SOTP, which is now based on 2025E forecasts, points to a fair value of c.975p. Here we primarily use EBITDA multiples based on 2025E (i.e., fully recovered and pro-forma) forecasts benchmarked against relevant historical transactions in the B2B space and cross-checked against revenue multiples. The Informa Markets business (exhibitions) has the highest multiple applied to it (15x EV/EBITDA), while we apply the lowest multiple to Taylor & Francis (academic publishing) – using 10.0x EV/EBITDA to reflect our expectations of low-single-digit organic growth and ongoing (but probably over-inflated) industry concerns around the business model.

Our DCF analysis, which is based on an 8.5% discount rate and a 3.0% long-term growth rate, implies a FV per share of c.980p.

We base our 980p target price on these two analyses.

We see the following risks to our target price: 1) Scope for further disruption from coronavirus which could materially impact ST forecasts; 2) More investment could be required post the Growth Acceleration Plan; 3) Impact of FX on reported numbers could be greater than expected; 4) Execution of the Penton and UBM integrations could be worse than expected; 5) Structural outlook for Academic Publishing could become more challenged. If the impact of these factors is greater than we anticipate, the stock may underperform our target price.

Areas where we could be too conservative include: 1) forecasts for medium-term growth for the exhibitions-related businesses where a better macro environment could drive better organic growth trends; 2) academic publishing where we reflect the risk of structural dislocation in not only our forecasts but also our assessment of valuation. These factors could drive upside risk to our estimate of fair value.