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InterQuest Group – share tip of the year update

By Steve Moore | Friday 5 February 2016


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Following an overall positive 2015 (see HERE), my first of two tips for 2016 was shares in specialist recruiter in technology, analytics and digital markets, InterQuest Group (ITQ) at an 82p offer price. What’s happened here so far this year?

In that initial piece I noted that the resignations last year of the CEO and CFO had unsurprisingly caused uncertainty on the shares, but experienced replacements had been appointed and that trading looked to be positive. The latter has since been confirmed by a 25th January trading statement.

This update noted “continued strong growth in Net Fee Income” and “an improvement to the group's net operating margin of c.200 basis points to c.23% (2014: 21%)” – with trading for 2015 stated to have been “in line with market expectations”. Chairman Gary Ashworth added that he is “encouraged by the continued growth we are experiencing and the exciting initiatives of our new executive management team”.

The news helped the shares up from just over 80p, but, ahead of the 2015 results announcement scheduled for 9th March, they have since slipped back to this level. In relation to (now even more confidently) anticipated earnings per share of 11p+ and a final dividend per share of 2.2p+ (1p interim having been paid in November), a solid enough balance sheet and the noted ‘encouraging continued growth’, the valuation here continues to look much too harsh.

Early in the year it was announced that new Chief Financial Officer David Bygrave had bought £10,625 of shares in the company (at 85p each) and more recently that Close Asset Management has an increased more than 5% shareholding. I consider that upcoming results are likely to reinforce that a re-rating here is well merited and thus, ahead of these, my stance remains unchanged on this pick for 2016.


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Comments

1 comments

  1. Results seem decent to me, strange sell off. Perhaps because of a slightly lower then anticipated divi? Looks solid to me though.


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