UBM may only be three simple letters, but in the world of multinational media companies, they mean a great deal. Based in London, England, UBM runs live media B2B communication operations within the fashion, trade, transport, ingredients, healthcare, and technology industries. From a stock perspective, UBM shares are a feature on both the London Stock Exchange and the FTSE 250, which almost cements their status as a major player in the field. But are UBM shares all their cracked up to be?
The big news surrounding UBM and UBM shares in 2014 has been the steps the company took to reroute their business. The British events company has made the decision to invest between £25 million to £50 million into furthering their interest in their most profitable shows. This redirection is set to take place over the course of three to five years, while they also plan on rolling out their “Events First” strategy as well. Chief Executive Tim Cobbold mentioned in a statement that the move will “enable [UBM] to grow revenues ahead of global GDP in our events business and provide a basis for margin expansion over the medium term”. It’s a big statement, but at this early stage, a statement is all it is.
In order to help fund such redirection (among countless other things), the company chose to go forward with a rights issue, which upon completion should raise £565 million pounds. Additional funding is one reason for offering a rights issue, but the underlying issue has been attributed to the impact that the 4% fall in the FTSE 250 had on UBM shares. It has also come out that the terms of the deal have some investors worried, as the discounts being issued means that UBM shares are being unnecessarily undervalued. The company plans to issue a total of almost 20 million shares in an attempt to raise the desired funds. As with every rights issue, success is not guaranteed, but UBM having seemingly done a good job in drumming up interest in UBM shares.
If you have qualms about UBM shares, looking to the analysts can also be useful to help you in your decision-making. Leading firms AlphaValue, Citigroup Inc, Canaccord Genuity, and Societe Generale have regularly backed the stock publicly with “buy” ratings, which in the day and age of analysts going back and forth may stand for something. However, as always the final decision to buy UBM shares should come from you.
UBM is an interesting commodity that is for sure. Analysts love them and aren’t shy in saying so either, but the rights issue and redirection of money are bold moves that don’t offer a set in the stone outcome. Should you be looking to buy UBM shares, you are going to need to take a long look at both of these issues. While you need to evaluate just how much damage a dip could do to your portfolio, as with UBM shares even though the good times are sure to come around, it may not be until the aforementioned issues are settled.
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