I don’t want to jinx it, but the sentiment could be changing for IPH.

According to an article by James Mickleboro from The Motley Fool today (02/10/2025) Macquarie is forecasting a 60%+ return over the next twelve months (ie. dividends and capital appreciation).

While I think Macquarie’s forecast is entirely feasible, I would consider it my bull case.

I’ve been accumulating quite a few IPH shares in our portfolios over the past few days. I like IPH because it fits one of my favourite investment strategies, “Getting paid to play while you wait!”

With the shares currently trading at $3.60 per share, I am expecting a 30%+ return over the next twelve months, based on a conservative valuation of $4.35. I think the risk/reward proposition for IPH is highly attractive at the current share price.

Held IRL 2.9%, SM 1.8%

James Mickleboro, The Motley Fool (02/10/2025) https://www.fool.com.au/2025/10/02/macquarie-tips-60-return-for-this-asx-all-ords-stock/

Key points

• Macquarie forecasts a potential 54% share price increase for an ASX All Ords stock, combined with high dividend yields.
• Despite recent challenges, the stock's attractive valuation and operational improvements present a compelling buying opportunity.
• Investors can expect generous dividend yields of 10.9% for the coming years, enhancing the overall return potential.

If you are hunting a combination of major upside and a big dividend yield, then read on

That's because Macquarie Group Ltd (ASX: MQG) has just named one ASX All Ords stock that it believes will deliver both.

Which ASX All Ords stock?

The stock that Macquarie is feeling bullish about is IPH Ltd (ASX: IPH).

It is an intellectual property (IP) services group with a network of member firms working throughout 26 IP jurisdictions. The ASX All Ords stock notes that it works with a diverse client base of Fortune Global 500 companies and other multinationals, public sector research organisations, small businesses, and professional services firms.

Its group includes leading IP firms AJ Park, Griffith Hack, Pizzeys, ROBIC, Smart & Biggar, and Spruson & Ferguson, as well as online automated trade mark application platform, Applied Marks.

Macquarie notes that data shows that the ASX All Ords stock has been battling tough trading conditions. It said:

IPH's sustained lower filing activity saw market share in Aust 26.5% for September prior to seasoning. IPH PCT filings remain volatile, down -8% YoY in Sep-25. Global activity (12-18mth lead indicator): US PCT activity growth remains negative (-7.1% qtr rolling, -5.0% annual rolling to Jun-25). Allowing for a 12-18mth delay between primary market filings (US) and secondary market filings (Aust), current Aust activity correlates with the historical weak US activity.

However, it is worth noting that things were better than previously expected in recent months. This has led to positive revisions to initial filing estimates for June through to August. Together with its attractive valuation, underlying improvements, and cost outs, Macquarie sees this as a buying opportunity for investors.

Big returns

According to the note, the broker has retained its outperform rating and $5.55 price target on its shares.

Based on its current share price of $3.61, this implies potential upside of 54% for investors between now and this time next year.

But the returns won't stop there. Macquarie is forecasting partially franked dividends of 39.5 cents per share in both FY 2026 and FY 2027. This equates to very generous dividend yields of 10.9% for both years.

Combined with its potential share price gains, this means that a total 12-month return of approximately 64% is on the cards for buyers at current levels.

Commenting on its recommendation, Macquarie said:

Outperform. Despite disappointing operating performance in FY25, the cost-out, underlying improvement in FY26e and cash generation remain attractive. Catalysts: Recovery in filing volumes and improvement in US PCT filings.

22/08/2025 https://www.investing.com/news/analyst-ratings/canaccord-genuity-downgrades-iph-stock-to-hold-amid-declining-patent-filings-93CH-4206054

Investing.com - IPH Limited (ASX:IPH) stock rating was downgraded from Buy to Hold by Canaccord Genuity on Friday, with the firm also lowering its price target to AUD4.95 from AUD5.75.

The downgrade follows a 20% share price decline after IPH released its fiscal year 2025 results, which Canaccord described as "broadly in-line" with expectations but insufficient to prevent the stock’s drop.

Canaccord cited IPH’s declining Australia and New Zealand patent filing share as a continuing problem, noting it fell below 30% during fiscal year 2025, while U.S. patent filings remain "lacklustre" as a leading indicator.

The research firm also identified rising competitive pressures in both the Australia-New Zealand market and in Asia as factors in its decision to lower earnings per share estimates for fiscal years 2026 and 2027.

Canaccord stated that "catalysts seemingly thin on the ground" contributed to the rating change, suggesting limited near-term growth drivers for the intellectual property services company.

The IPH share price has copped a real hammering since management released its FY2025 results on 21st August 2025. The share price has lost 34%, falling from $5.60 to $3.71 today (22/09/2025).

I believe the key reason is market disappointment following a miss on analyst consensus. This miss was questioned by the ASX watchdog.

In response, IPH said that as of the 17 July 2025 (i.e. before their results release), the market consensus estimates for FY25 were as follows:

• “Underlying EBITDA for FY25 was only 1.4% less than consensus and Underlying NPATA was 4.1% less than consensus.” 
• For Statutory NPAT, IPH notes that its result was 12.2% less than consensus, still within what they regard as a “materially acceptable” variation (i.e. within 15%)  
• The company remarks that the difference versus consensus was not large enough to be surprising and that they did not view the variance as having materially damaged investor expectations. 

This may have satisfied the ASX watchdog, but it obviously didn’t go down to well with investors. I consider a 12% miss in statutory NPAT a significant disappointment!

What was behind the 12% miss in Statutory NPAT?

One of the key reasons reported by IPH was the “Underlying EBITDA margin was down 2.9pp reflecting the reduced margin in the Canada segment arising from the CIPO (the Canadian Intellectual Property Office) disruption to patent workflow, impact of the lower margin B&P acquisition completed during the year (ahead of integration synergies activated in the second half of the year) and lower Canada legal/litigation revenue. The chart below shows the impact on workflow as a result of CIPO delays during 2025 (shows Smart & Bigger only).

Source: IPH results presentation

In Canada, the Underlying EBITDA margin fell from 30.5% (FY24) to 25.9% (FY25), a drop of 4.6 percentage points. This is significant considering 41% of the total revenue is coming from Canada. In comparison, EBITDA margins in ANZ and Asia are 35.4% and 42.6% respectively.

What is going on with the CIPO? (ChatGPT’s summary)

CIPO (the Canadian Intellectual Property Office) is actively trying to reduce the backlog. Below is a summary of the current situation and forecast, along with caveats — and then my best estimate of when “clearance” might occur (or at least when the backlog may shrink to manageable levels).

Current status & recent improvements

Patents

• CIPO launched a new portal, MyCIPO Patents, in July 2024 as part of its “Next Generation Patents” modernization initiative, and by October 2024 most of its functionality was live.  
• But the rollout has been rocky: there are delays in correspondence processing, fee payments, and status updates.  
• As of May 2025, CIPO is still working through its backlog of incoming correspondence (from mid-2024) and processing final fee payments.  
• Patents granting was paused for several weeks during the conversion, but has since resumed.  
• However, CIPO has not provided a clear “finish date” for clearing the backlog, and status corrections (e.g. erroneous “abandoned” labels) may continue to take time.  

In short: the patent backlog is being worked on, but it’s not yet “cleared,” and many delays remain.

Trademarks

• The trademark backlog has been more publicly discussed in terms of backlog “clearance.”  
• At one point, CIPO had backlog levels of ~185,000 pending trademark applications awaiting examination.  
• CIPO has stated that by the end of 2025 it hopes to reduce the backlog to ~65,000.  
• Some commentators expect that the “first examination” lag (for non-“picklist” (pre-approved goods/services) applications) may drop from the current multi-year wait to roughly 1 year by March 2026.  
• For applications that use only pre-approved goods/services (the “picklist”), the waiting time to first examination is forecast to be ~13 months.  
• Some legal commentary suggests that the backlog may not be fully “cleared” (i.e. zero backlog) but could be reduced to acceptable levels by late 2025 or early 2026.  

Estimate & caveats

Given all that, here’s my reasoned projection:

• For trademarks, it seems plausible that CIPO might reduce its backlog significantly (though not eliminate it entirely) by end of 2025, with “manageable” first examination times (e.g. ~12–18 months for many filings).
• For non-picklist (i.e. more complex) trademark filings, full normalization might extend into early 2026.
• For patents, because of difficulties with the portal transition, unprocessed correspondence, and status corrections, it may take until mid to late 2025 to see backlog substantially reduced, but full “clearance” is harder to predict (and may stretch into 2026 in edge cases).

So overall: late 2025 to early 2026 seems a reasonable window for significant backlog relief, though “clearance” in an absolute sense (i.e. no backlog) may take longer.

How much is the CIPO backlog affecting IPH’s NPAT Margins?

I asked ChatGPT to calculate how much the CIPO delays in Canada are effecting overall NPAT margins for IPH, and assuming the backlog clears within 6 months, what is the likely NPAT for FY2026?

Here is ChatGPT’s response:

“I pulled together IPH’s FY25 numbers and the company commentary on the CIPO issue, then ran a simple, transparent model to estimate the FY26 NPAT impact if the Canadian backlog clears within ~6 months. Below I show the data I used, the assumptions, the step-by-step maths, and a final point estimate plus a small sensitivity range.

Key facts / sources used

• FY25 group results: Revenue A$710.3m; Underlying EBITDA A$207.2m; Statutory NPAT A$68.8m.  
• Canada margin change: Canada Underlying EBITDA margin fell from 30.5% (FY24) to 25.9% (FY25) (a drop of 4.6 percentage points). IPH states this was partly from the CIPO disruption and the B&P acquisition.  
• Canada scale: Management has said Canada represents roughly ~41% of group revenue (annualised for current acquisitions). (HY25 commentary / Appendix) — I use 41% as the working share.  
• Cost savings: IPH expects annualised cost savings of A$8–10m from FY26 (program activated as of July 2025).  

Approach / assumptions (explicit)

1. Canada revenue (FY25 basis): assume Canada ≈ 41% of Group revenue → Canada revenue ≈ 0.41 × 710.3 = A$291.2m. (rounded)  
2. CIPO effect on Canada EBITDA margin: FY25 Canada margin 25.9% vs FY24 30.5% → margin shortfall = 4.6pp (we treat that shortfall as largely caused by the CIPO backlog + acquisition timing).  
3. If backlog clears within 6 months: assume Canada margin recovers back to FY24 level (30.5%) during FY26 (this is the base case). That gives a one-off/annualised EBITDA improvement equal to 4.6% × Canada revenue.
4. Add FY26 recurring cost savings: use midpoint A$9m (range A$8–10m).  
5. EBITDA → NPAT conversion: use FY25 group conversion ratio as a guide. FY25 Underlying EBITDA A$207.2m → Underlying NPATA A$120.6m ⇒ conversion ≈ 120.6 / 207.2 = 0.582. I apply that multiplier to incremental EBITDA to estimate incremental NPATA/NPAT contribution (this implicitly folds in tax, depreciation, interest and amortisation patterns similar to FY25).  

Note: these assumptions are intentionally conservative and transparent — in reality conversion from extra EBITDA to NPAT depends on mix (service vs disbursement), interest, tax timing, and amortisation of acquired intangibles.

The maths (step by step)

1. Canada revenue (estimate):
2. 0.41 × 710.3 = A$291.2m
3. EBITDA uplift if Canada margin returns to 30.5%:
4. Margin uplift = 30.5% − 25.9% = 4.6%
5. EBITDA uplift from Canada = 4.6% × 291.2 = A$13.4m (rounded)
6. Add cost savings (midpoint): A$9.0m
7. Total incremental Underlying EBITDA (FY26): 13.4 + 9.0 = A$22.4m
8. Convert incremental EBITDA → incremental NPATA (using 0.582):
9. 22.4 × 0.582 = A$13.0m incremental underlying NPATA/NPAT contribution
10. Apply to FY25 baseline NPAT:
11. FY25 statutory NPAT = A$68.8m → + incremental ~A$13.0m → ≈ A$81.8m
12. Alternative (conversion via NPATA → statutory NPAT ratio):
13. FY25: statutory NPAT 68.8 vs underlying NPATA 120.6 ⇒ ratio ≈ 0.57. If we instead add 13.0m to NPATA (120.6 → 133.6) and apply 0.57 → ~A$76.2m statutory NPAT. This gives a similar order result (reflecting method risk).

Final estimate (base case)

• Likely FY2026 statutory NPAT ≈ A$76m – A$82m, with a best single estimate ~A$79m.
• I report a range because conversion assumptions (NPATA→NPAT), timing of the backlog clearance inside the year, and whether clients refile immediately all cause variance.

Sensitivity / alternate outcomes

• If recovery is only partial in FY26 (margin recovers only half the 4.6pp): incremental EBITDA ~A$6.7m (half of 13.4) + A$9m savings = A$15.7m → incremental NPATA ≈ A$9.1m → FY26 NPAT ≈ ~A$78m (lower side).
• If recovery is faster + some valuation/volume upside (margin returns and Canada revenue grows modestly): incremental EBITDA could be larger (say +A$18–25m), pushing FY26 NPAT into the mid-to-low A$80m to A$90m area.
• If CIPO recovery slips / litigation revenue stays low: the uplift could be smaller or nil; FY26 NPAT could remain near FY25 (~A$68–72m).

Main risks / caveats

1. Canada revenue share assumption (41%) is management guidance (annualised); if actual FY25 Canada revenue is materially different the numbers change proportionally.  
2. EBITDA→NPAT conversion depends on amortisation of acquired intangibles (NPATA adjustments), tax timing, and finance costs — I used FY25 group ratios for a pragmatic estimate.  
3. The model assumes the backlog clearing drives immediate recognisable billable activity in FY26 — real world timing and client re-filing behaviour may spread revenue into later periods. CIPO operational issues could also cause timing differences.  

Short answer you can act on

• If the backlog clears within ~6 months and cost savings of A$8–10m are realised, IPH’s FY26 statutory NPAT is most likely in the A$76m–A$82m range (best estimate ≈ A$79m).
• If recovery is slower / partial, expect NPAT closer to FY25 (A$68–75m).
• If Canada outperforms on re-filing and synergies exceed expectations, NPAT could exceed A$85m.”

My Take (Rick)

It would appear that lower NPAT margins in Canada can be partly attributed to a temporary CIPO backlog caused by upgrades to the CIPO system. This is a temporary issue out of IPH’s control and has been impacting both revenues and margins in IPH’s Canadian business this year. Once these backlogs have cleared, and the cost savings have been implemented, this should boost both revenues and margins in Canada. Canada makes up 41% of IPH’s revenue, so any improvements here will be significant to overall margins and NPAT for the business. The market might not be seeing these current issues as temporary, so this could be an opportunity to buy a decent dividend paying business at a reasonable price.

The current NPAT consensus for FY2026 is $84 million (8 analysts, Simply Wall Street). It would appear that consensus is based on the CIPO backlog clearing soon, the $8-$10 million in promised cost savings being realised, and some organic revenue growth. I think $84 million ($0.33 per share) is a reasonable NPAT assumption for valuation purposes, but I’ll leave that for another straw!

Source: Simply Wall Street

Disc: Took a nibble today IRL and SM. Might add more pending further research?

I don’t own IPH Limited…thankfully! The shares have lost nearly 65% of their value in 3 years!

Source: Simply Wall Street

Despite this, the business is paying a whopping 9.8% partially franked dividend, and it has done OK! It’s a hard one to fathom because many of the indicators have grown!

Over 8 years sales have nearly tripled, EPS is up by 40%, dividends have grown by 70%, book value per share has more than doubled, and the ROE is not too shabby!

On the negative side ROE has declined from 18.6% down to 12.4%: This may be the result of decreasing profit margins over time which is a worry!

Source: CommSec

Debt has grown with net gearing increasing from -10% to +58%.

Source: Simply Wall Street

FY2025 Results Summary

• Revenue up 16.5% and Underlying EBITDA up 6.0% year on year; reflects acquisitions in Canada

• Underlying NPATA of $120.6m, up 7.3%; equating to Underlying Basic EPSA of 45.3 cps (FY24: 46.4cps)

• Statutory NPAT $68.8m, up 13.2%; equating to Basic EPS of 25.8 cps (FY24: 25.1cps)

• Continued strong operating cashflow generation – cash conversion ratio of 103%

• Final dividend declared of 19.5 cps; total dividends for FY25 of 36.5 cps (FY24: 35.0 cps)

• Organic revenue growth achieved in ANZ despite lower market patent filings

• IPH Asia patent filings up 16.5% in FY25 – supports future revenue and earnings

• CIPO issues delayed revenue in Canada – emerging signs of recovery in FY26 as systems are restored.

About IPH Limited

IPH Limited, together with its subsidiaries, provides intellectual property (IP) services and products. It operates through three segments: Australian and New Zealand IP, Canadian IP, and Asian IP. The company offers IP services related to the provision of filing, prosecution, enforcement, and management of patents, designs, trade marks, legal services, and other IP.

It serves Fortune Global 500 companies, multinationals, public sector research organizations, SMEs, professional services firms, universities, foreign associates, and other corporate and individual clients. IPH Limited was founded in 1887 and is based in Sydney, Australia.

Morgan’s Take

Here is a recent note (10/09/25) shared by James Mickleboro from The Motely Fool: https://www.fool.com.au/2025/09/10/these-top-asx-dividend-shares-offer-huge-7-to-9-yields/

“Over at Morgans, its analysts think that intellectual property company IPH could be an ASX dividend share to buy.

While its performance wasn't great in FY 2025, Morgans feels positive about its outlook and sees its current valuation as cheap. The broker explains:

On a like-for-like basis, IPH reported flat FY25 revenue and EBITDA -4% on pcp. Each geography recorded marginal LFL EBITDA pressure, a mix of lower filings (ANZ); cost inflation (Asia); and some temporary issues (CAD). Whilst organic growth is still challenged, the FY26 outlook for each division looks relatively stable or marginal incremental improvement. A cost out program (A$8-10m in FY26) will assist. IPH's valuation is undemanding (<10x FY26F PE), however investor patience is required given the delivery of organic growth looks to be the catalyst for a sustained re-rating.

As for dividends, Morgans is forecasting fully franked payouts of approximately 37 cents per share in FY 2026 and FY 2027. Based on its current share price of $4.24, this would mean dividend yields of 8.7%.

The broker has a buy rating and $6.05 price target on its shares.”

My Take

While I’m not quite ready to jump in yet, but I have added IPH to my watch list. The chart looks shocking! It has been a relentless downward trend for over 3 years. I do have a feeling that the share price might be close to a turnaround. I think the shares have gone from being way too overvalued to undervalued!

My valuation using McNivens Formula (https://strawman.com/forums/topic/8371) comes out at $4.20 (aiming at a 15% return on investment). At the current price of $3.80, I would be expecting a 16% return over the next 3 to 5 years. This is based on consensus earnings growth over this time period.

Source: Simply Wall Street

Analysts are also forecasting forward dividends of approx 10% partly franked next year! The risk/reward opportunity is looking very attractive at the current share price!

Source: Simply Wall Street

Any thoughts out there! What other negatives can you see going forward? Here’s one from the results summary to start with:

“As performance of the Group is subject to variability from impact of foreign exchange movements as well as acquisitions part way through financial years, the Company presents financial performance on a like-for-like basis.

On a like for like currency adjusted basis, revenue was flat on the prior year with variability in geographic markets.

On a like for like currency adjusted basis, Underlying EBITDA was 3.9% down on the prior year as the flat revenue, coupled with incremental costs, impacted earnings and margin. During the second half of the year the Group implemented a corporate cost reduction program to better align costs to revenue.”

Not held.