Small-cap stock IVE Group (ASX: IGL) held its Annual General Meeting yesterday.
IVE Group is the largest integrated marketing communications business in Australia, with leading market positions across every sector in which the company operates.
This small-cap stock has been a market beater in 2025.
It has risen more than 33% year to date.
For context, the S&P/ASX Small Ordinaries Index (ASX: XSO) is up 16% in the same period.
However, the company provided a trading update yesterday, which was effectively a soft downgrade to FY26 guidance.
Ive Group reported that YTD revenue has been softer than expected across the retail and media sectors, impacting IVE's catalogue business in particular.
FY26 underlying NPAT is now expected to be at the bottom end of the previously advised $50-54m guidance range.
Markets reacted poorly to this update, as the small-cap stock lost more than 6% yesterday.
Following the AGM, the team at Bell Potter released fresh guidance on the ASX small-cap stock, which included a reduced price target.
Here's what the broker had to say.
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EPS downgrades
The broker has maintained its buy recommendation on IVE Group; however, it has downgraded the underlying NPAT/EPS forecasts for FY26, FY27, and FY28 by 6%, 7%, and 7%, respectively.
Bell Potter said it previously forecasted underlying NPAT of $54.2m, which comprised $53.4m for the core business and $0.8m for the recent acquisitions.
Yesterday, it downgraded its core forecast to $50.2m, which is consistent with the bottom end of the range.
Reduced share price target
Based on this guidance, the broker has downgraded the price target to $3.10 (previously $3.25).
Our updated PT of $3.10 is an 11% premium to the share price and we maintain the BUY recommendation.
Based on yesterday's closing price of $2.81, the broker sees an estimated upside of 10.32%.
Small-cap stock also offers generous yield
This ASX small-cap stock could be an option for investors looking to generate passive income through healthy dividends.
Bell Potter said IVE group has a history of paying dividends and has a payout ratio policy of between 65-75% of underlying NPAT/EPS.
The company has, however, held the dividend steady at 18 cents recently and has said it intends to keep it at this level in FY26.
Thereafter, however, the company intends to return to a payout ratio policy of 55-65% of underlying NPAT/EPS.
The broker said the forecast dividend yield over the next three years is a healthy 6.4%, 7.1%, and 7.5% fully franked.
