Business Description

IHS Markit is a leading provider of data and analytics to corporate and sovereign clients across a wide variety of industries. Financial markets accounted for 42% of fiscal 2020 revenue, transportation 27%, resources (energy and chemicals) 20%, and CMS (consolidated markets) 11%. Approximately 60% of fiscal 2020 revenue came from the United States. IHS Markit has approximately 16,000 employees worldwide. About 74% of fiscal 2020 revenue was recurring and fixed, 14% recurring and variable, and 12% non-recurring. S&P Global has offered to acquire IHS Markit, with holders of the target firm set to receive 0.2838 shares of the combined entity (a little less than one third of the total), in a deal valued at $44 billion upon announcement.

Recommendation (Sept 2020)

Not been a great business in the past, but may be turning around now. A price of $78.60 per share does not make for a great investment.

$78.60 per share implies that INFO will grow its revenue at a CAGR of 13% over the next 10 years, at an EBIT margin of c.17% (similar to the last 10 years).

We believe the company is in range of our fair value estimate.

If we assume that EPS will grow at a 13% CAGR for 10 years and that INFO will trade at a PE multiple of 25x in 2029, then the Projected-Price in 2029 would be $169 per share.
A purchase today at $78.60 would result in a return of a 8% CAGR (2x).

For the full report, see link below