Deutsche Bank (ETR:DBKGn) updated its outlook on London Stock Exchange Group Plc. (LON:LSEG:LN) (OTC: LNSTY), raising the price target to GBP97.00 from GBP92.00. The firm maintained a Hold rating on the stock. The revision anticipates the company's strong performance in the upcoming third-quarter results set to be announced on October 24, 2024.
The bank forecasts that LSEG will exhibit robust organic revenue growth above 8%, propelled by another quarter of high growth at Tradeweb and steady growth in data businesses. Despite this, it is expected that the growth in Post Trade will be tempered due to non-recurring impacts, including the Euronext clearing termination.
In anticipation of the forthcoming financial results, Deutsche Bank has modestly reduced its earnings estimates for LSEG by 2% to 4%, primarily attributing this adjustment to the strengthening of the British Pound. Nonetheless, the target price has been increased slightly as the valuation has been rolled over to the year 2026.
The analyst noted that the London Stock Exchange Group is trading at 24 times its projected 2026 earnings and 17 times its expected 2026 enterprise value to EBIT (earnings before interest and taxes). This assessment suggests that the stock's current price reflects its fair value, leading to the Hold rating being reaffirmed.
London Stock Exchange Group (LSEG) has been the focus of several notable updates. Redburn-Atlantic maintains its Buy rating on LSEG, anticipating a 30% potential upside for the stock. The firm attributes this to expected returns on investments following the Refinitiv acquisition and a strategic focus on enterprise sales. RBC Capital Markets also reports solid first-half financial results for LSEG, raising its price target for the company's shares to £110.00 from £107.00, and reaffirming its Outperform rating.
The success of Workspace (LON:WKP), an innovative platform offered by LSEG, is cited as a key driver of this positive assessment. Additionally, Jefferies, a global investment banking firm, has raised its price target for LSEG from £110.00 to £115.00, maintaining its Buy rating. This reflects Jefferies' optimism about the company's growth potential, particularly in its subscription income, which is expected to accelerate from 2025 onwards.
InvestingPro Insights
To complement Deutsche Bank's analysis, InvestingPro data offers additional insights into London Stock Exchange Group's financial performance and market position. The company's market cap stands at $70.26 billion, reflecting its significant presence in the financial markets.
InvestingPro Tips highlight that LSEG has maintained dividend payments for 24 consecutive years, demonstrating a strong commitment to shareholder returns. This aligns with the company's stable business model and consistent performance noted in the Deutsche Bank report. Additionally, LSEG's net income is expected to grow this year, which supports the bank's forecast of robust organic revenue growth.
However, it's worth noting that LSEG is trading at a high earnings multiple, with a P/E ratio of 80.32. This high valuation echoes Deutsche Bank's assessment that the stock is currently trading at fair value. The company's revenue growth of 4.91% over the last twelve months and a gross profit margin of 86.51% further underscore its solid financial position.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide deeper insights into LSEG's investment potential.
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