IPH: Top stock pick or Double sell?

Livewire Equities

Leading Asian-Pacific intellectual property group, IPH has announced positive numbers this morning. After the price nearly halved through CY16, Sam Haddad at Bell Potter chose it as a top stock pick for FY18. However, Tony Waters of QVG and Jeremy Bendeich at Avoca recently provided seven stark warnings.

Sam Haddad, Bell Potter: IPH a top stock pick for FY18

We believe IPH’s share price has bottomed and currently represents an attractive, timely opportunity to Buy. We believe the key negative issues that have recently weighed on the stock are now behind (i.e. share overhang from escrowed shares removed and AIA impacts cycled), and believe a number of positives now lie ahead.

The key positive factors we see include: 1) the resumption of solid growth in IPH Asia; 2) integration synergy benefits from recent acquisitions to flow from 2HFY18/FY19; and 3) EPS accretive acquisitions in Asia and new secondary markets.

Overall, we believe IPH is a high-quality business with attractive operating attributes in a structurally growing industry and accordingly believe the stock’s trading FY18 PE of ~15x is undemanding. The stock also offers an attractive FY18 yield of 5-6%. (VIEW LINK)

Tony Waters, QVG; Jeremy Bendeich, Avoca: Double Sell for IPH

In a recent Buy Hold Sell, IPH featured as a ‘fallen angel’, with the panel giving it a brutal assessment, citing at least 7 reasons between them to steer clear: (VIEW LINK)


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