Shares in international intellectual property services group IPH Ltd (ASX: IPH) have been on a downward trend since the company announced its full-year results in August. However, the team at Macquarie believes this could present a buying opportunity.
First of all, there's the fact that at the current share price, the company is on track to pay a dividend yield, albeit only partially franked, of 10.7% this financial year, on top of a 9.9% yield last year.
And the team at Macquarie are forecasting the yield to stay high, above 10%, through to FY28.
IPH reported an underlying increase in net profit in August of 7.3% to $120.6 million, and said it had achieved organic revenue growth in Australia and New Zealand despite lower market patent filings.
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Organic growth this year
At the time, the company's Chief Executive Officer, Dr Andrew Blattman, said IPH's priorities for FY26 were to target organic growth and cut costs.
He said:
Our focus remains on organic growth with business development initiatives targeting Western Europe, Japan, South Korea and Chinese incoming filings. In Asia, we aim to build on the current momentum in filings to deliver revenue and earnings growth. Our focus in Canada is to leverage our integrated platform and the anticipated recovery in patent workflow.
The Macquarie team has run the ruler over the IPH financials, and while they are not overly impressed with the company's operational performance, they still believe it's attractively valued at the current share price.
As they said in a note to clients:
Despite continued disappointing operating performance, the cost-out, underlying improvement in FY26 and cash generation remain attractive.
Macquarie has a price target of $5.55 on IPH shares compared with the close on Monday of $3.70.
If achieved, once dividends are factored in, this would equate to a total shareholder return over the next 12 months of 60.7%.
Crucial annual meeting coming up
IPH is also about to face a crucial shareholder vote at its upcoming annual general meeting (AGM) on 20 November.
The company received a first strike against its remuneration report at its AGM last year, with 48.4% of votes cast going against the adoption of the report.
Should the company receive another strike vote, that is, a vote against more than 25%, it will trigger a vote on a spill resolution, which has the ability to unseat the board.
Shareholders will also be voting on the issue of performance rights for Dr Blattman.
