Unpredictable? Pollster's shares shrug off forecasts

© Reuters. Unpredictable? Pollster's shares shrug off forecasts

LONDON (Reuters) - How's this for an unexpected outcome: shares of London-listed pollster YouGov (L:YOU) have risen 14 percent so far this year, soundly beating the broader market, despite a bum steer on the UK election.

Yet political polling matters far less to the small-cap company's bottom line than market research. While YouGov's president admitted "we got it wrong" with too-close-to-call forecasts for an election where David Cameron's Conservatives triumphed, corporate clients have shown no sign of deserting.

YouGov's stock has outperformed blue-chip UK and pan-European equities and trades at a premium to larger European marketing companies such as France's Ipsos (PA:ISOS). Seven out of 12 analysts rate it "Buy" or higher.

"YouGov's political analysis has proven to be very wrong, but they are performing quite well in the corporate world," said Alex de Groote, an analyst at Peel Hunt, describing the company as more of a "data technology" play than a pure pollster.

The corporate market is challenging. Shares of Germany's GfK (DE:GFKG) hit a four-year low this week after it issued a profit warning, and spending on advertising is slowing in Brazil, Russia and China, according to ZenithOptimedia. Ipsos has called emerging markets "disappointing". But next year two big political events could put pollsters back in the public eye - November's U.S. presidential election and, potentially, a referendum on Britain's European Union membership.

YouGov says it has a "long history of accuracy" on political polling and will be able to address some of the problems posed by the UK election. Numis Securities analyst Paul Richards said last month he expected 9 percent revenue growth from 2015 to 2017.

"Right now I don't see any new factors in the world which would lead us to think we can't deliver," said YouGov Chief Financial Officer Alan Newman.

But YouGov's share price rise means pressure to deliver on expectations. "One bad (political polling) mistake is fair enough. Two or three and people will start to ask questions," said Peel Hunt's de Groote.