IPH Limited (IPH) listed at $2.00 in late 2014 and soared to over $9.00 just one year later. The market clearly liked the story. But for the past 12 months, the share price has steadily declined and IPH now trades around $5.00. After this sort of a fall, we had a good look at the business to see if IPH had become a bargain.
“Listed law firm” is not a phrase to gladden the heart of an investor, after Slater & Gordon’s 98 per cent plunge in just 12 months – March 2015 to March 2016 – and Shine Corporate’s 80 per cent plunge from grace, which took just a few minutes on January 29 this year.
A very strong result from IPH beat forecasts across the board, helped by cost discipline and forex tailwinds, Morgans notes. The stock is a quality defensive with a big step-up in earnings offered by the Xenith acquisition, with margin increases expected ahead as has been the case with AJ Park.
IPH has announced a proposal to acquire listed competitor Xenith IP ((XIP)) with a scrip and cash offer. This offer values the business at $1.97 per share and under the proposal shareholders will receive $1.28 in cash and 0.1056 IPH shares for every Xenith share.