Publishing group Informa (INF) has rallied by 30% since November 2012 on bid speculation, yet analysts are now turning more cautious on the FTSE 250 constituent's prospects ahead of full-year results on Thursday (21 Feb).


The £3 billion cap has enjoyed strong share price gains in the past three months on talk that the company is being stalked by Germany’s Axel Springer and a private equity consortium including Apax and Carlyle. It has previously been the subject of merger talk with rival FTSE 250 publisher UBM.


But as the merger and acquisition chatter has failed to materialise into a firm bid, analysts fear the market will want to see evidence of a turnaround in what remain tough trading conditions.


October's third-quarter update (16 Oct '12) revealed a disappointing 2% fall in like-for-like (LFL) sales during the first nine months of 2012 and consensus is predicting a 1% decline for the full year. In order to make the full-year numbers the business will need to have seen a 2% rise in LFL revenues in the fourth quarter.


Investec analyst Steve Liechti says: 'Sales could disappoint in 2012 but margin should do OK given cost rationalisation.' Meanwhile Roddy Davidson, from Westhouse, says: 'We moved our recommendation to neutral in December following a period of strong share price performance, which we felt owed more to bid speculation than underlying trading.'


Informa's big issue is its high exposure to the cyclical events space which accounts for 45% of revenues and approximately two thirds of profits. At its October update it warned of challenging conditions facing its smaller European conferences, in particular.


At the headline level, the market is forecasting sales of £1 billion for 2012, up 3.7% on 2011's £972 million turnout. A final dividend payout of 21.7p is predicted by consensus, for a total 27.7p distribution in 2012, equivalent to a 3.6% yield.

Issue Date: 18 Feb 2013