YouGov Shares Up 350% Despite a Tough Half-Decade For Pollsters

(Bloomberg) -- YouGov Plc may have got the public’s attention with its snap poll following this week’s debate between U.K. Prime Minister Boris Johnson and rival Jeremy Corbyn, but the country’s tumultuous politics haven’t been the main driver of a 350% rally for the shares over the past half-decade.

The company makes most of its money through services other than political polling, including tracking brand awareness and profiling target markets for companies, according to CEO and co-founder Stephan Shakespeare.

The shares have soared as the company’s Data Products and Data Services businesses have become a bigger contributor, enabling YouGov to achieve a goal to triple profits in five years. The two businesses made up 56% of 2019 revenue, up from 29% in 2014.

Shakespeare is hoping that publicly available data products, including the recently launched YouGov Ratings, which measures the popularity of public figures and brands, along with its Audience Explorer, which allows people to explore characteristics of a particular target market, will drive more companies to pay for YouGov’s data offerings by increasing the firm’s exposure.

Analysts are also bullish, with the three brokers who cover the company all recommending investors buy the stock. Their average price target suggests 16% upside for the stock, while the most bullish target -- a 700 pence target from Berenberg’s Sean Thapar -- implies 24% upside from the current 565 pence price.

Victoria Stevens, co-manager of the Liontrust U.K. Smaller Companies fund, which holds YouGov shares, said the company is improving the visibility and quality of earnings as it shifts revenue streams more toward data-driven products and services.

Stevens added that YouGov has “significant” intellectual property in the proprietary data collected from its member panel and noted that the firm also owns the software used to manage this data. According to YouGov’s website, the member panel includes eight million respondents across 38 countries. Liontrust Asset Management is YouGov’s biggest shareholder.

Still, with the election just weeks away, YouGov will remain in the spotlight for its polls for now, even though Berenberg’s Thapar says that polling makes up just 5% of its business.

Like most of its rivals, YouGov’s final poll ahead of the 2017 election underestimated Labour’s chances, predicting 35% of the vote for Jeremy Corbyn’s party compared with the 40% it actually received, according to a BBC analysis of pollster predictions following the result.

That said, the seat-by-seat formula the company piloted at the time, known as the multilevel regression and post-stratification model, or “MRP,” correctly predicted a hung parliament. Co-founder Shakespeare says there’s been “a lot of interest” in the MRP model ahead of this election.

“We are able to say we put our reputation on the line at every major election that comes along to show the accuracy of our data,” YouGov’s Shakepeare said. “That’s a very powerful story.”

To contact the reporters on this story: Kit Rees in London at krees1@bloomberg.net;Joe Easton in London at jeaston7@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Beth Mellor

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