A "high-quality core holding" with 17% upside

Our recent article charting the fortunes of companies that floated on the UK stockmarket in this spring's IPO boom showed plenty of winners - thus far, at least.

Those firms had the benefit of listing well after the outcomes of the EU referendum and US election were known and the markets had not only calmed, but powered to new highs. Still the previous spring also saw a number of firms coming to market that were not deterred by the looming political nightmares the awaited them.

Many have been extremely successful: indeed, one is predicted to have doubled from its placing price well within two years of coming to market.

FTSE 250-listed Ascential is a global business-to-business media company that runs a portfolio of market-leading events and information services in the media space. These include the Cannes Lions Festival of Creativity, and Money 20/20 for the financial services sector.

Formerly known as Top Right Group and Emap, it's already grown from an £800 million firm at IPO to have a current market cap of around £1.3 billion.

Monday's half-year results were nothing to write home about - in line with consensus expectations - but they snapped a slight weakening in the share price since it hit a record high in late May. Shares were up 3% in morning trading to 346p.

First-half revenues of £222 million gave the firm adjusted cash profit of £81.4 million - the latter number 29% ahead year-on-year and 2% above forecasts. Margin increased to 36.7% from 35.9%, thanks to a benefit from foreign exchange movements in its exhibitions & festivals division.

Both divisions - exhibitions & festivals and information services - saw "strong organic growth" and its two acquisitions - August's $44 million (£33.7 million) purchase of US-based e-commerce analytics provider One Click Retail and February's buy of media advisory firm MediaLink for $69 million - have made good progress.

Adjusted earnings per share (EPS) from continuing operations more than doubled to 13.3p and also beat expectations, this time a more significant 9%; basic EPS nearly tripled to 7.1p. Net debt was down to £221.4 million with net debt leverage of 1.7 times, and the interim dividend of 1.8% was a huge 20% up.

Chief executive Duncan Painter, a former executive at BskyB and senior man at credit agency Experian, said the firm goes into the second half of 2017 with "positive momentum" and is positive it can hit full-year expectations.

Strong free cash flow generation of £74.5 million, he adds, will help the firm continue to fund investment and acquisitions, as well as increasing dividend payments - a boon for investors.

It's already surged by three-quarters since its flotation last February at 200p and hit an all-time high of 364p two months ago. Initiation notes in March and April from brokers Berenberg and Citi were positive then, with the former sticking a £4 price target on the stock.

Whilst analyst comments are more-or-less positive, a couple lean towards caution. Deutsche Bank has only a 'hold' rating and price target of 350p; taken with Peel Hunt's 325p target, the stock looks fully valued. That said, Peel Hunt's Malcolm Morgan still views the share as "a high-quality core holding".

At first glance, the valuation doesn't seem obviously cheap, with 2017 forecast EPS of around 17p giving a forward price/earnings (PE) ratio in the region of 20 times.

However, Goldman Sachs analyst Katherine Tait says it's broadly in line with the EU media sector. That's "despite superior growth", with EPS compound annual growth rate of 20% expected through 2019 versus the sector's 12%.

Roddy Davidson at Shore Capital, meanwhile, adds three-year aggregate EPS growth of 56% is expected, while the dividend can almost double to 2019. On those metrics, it "offers attractive upside potential". Tate slaps a 398p target on the stock.

House broker Numis is the most bullish at 405p. That's up 8% on the previous price of 375p.

The stock has retraced back into its trading zone since breaking out to record fresh highs a couple of months ago, suggesting the price may have been fully valued.

However, whilst only a modest buy of £10,000, director dealing up at 351p by new non-executive director Paul Harrison, formerly chief finance officer of blue-chip Sage Group, suggests an element of confidence.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.