Friday, UBS analysts reiterated their Buy rating on London Stock Exchange Group (LON:LSEG) Plc (LSE:LN) (OTC: LNSTY) with a price target of GBP135.00. The firm's analysts see a 14% potential increase to their target, which does not rely on any multiple expansion. Currently trading at $37.29, near its 52-week high of $37.55, LSEG has demonstrated strong momentum with a 21.62% gain over the past six months. According to InvestingPro analysis, the stock appears to be trading above its Fair Value. They highlighted the significant value added by the partnership with Microsoft (NASDAQ:MSFT), reflecting positively in LSEG's share performance over the past two years.
The analysts projected a more substantial gain of 53% in LSEG's share value under their Microsoft Upside Scenario. However, they anticipate that the financial benefits from the partnership with Microsoft will not materialize until 2026, which is more than three years after the deal's inception. The scenario suggests an increase of 160 basis points in LSEG's EBITDA growth from 2026 to 2029. InvestingPro data reveals the company maintains a strong financial health score of 2.65 (GOOD), with robust gross profit margins of 86.51% and steady revenue growth of 4.91% over the last twelve months.
UBS's outlook for LSEG is based on the expectation that the company will transition from being perceived primarily as an exchange to being recognized as an information services provider. This re-rating is expected to be the primary driver of the incremental upside in LSEG's share value. The analysts emphasized that while the Microsoft partnership provides a solid tailwind, it is not seen as a game-changer for LSEG's overall growth trajectory.
The partnership between LSEG and Microsoft has been instrumental in enhancing LSEG's offerings, particularly in terms of data and analytics capabilities. The collaboration aims to leverage Microsoft's cloud technology to improve the data and analytics services LSEG provides to its customers.
In summary, UBS analysts maintain a positive outlook on LSEG stock, supported by the company's strategic initiatives and partnerships. With a market capitalization of $77.97 billion and a track record of maintaining dividend payments for 24 consecutive years, LSEG demonstrates strong fundamentals. They anticipate that these factors will contribute to continued growth and a potential re-rating of the company's market valuation in the coming years. InvestingPro subscribers can access 8 additional key insights and detailed financial metrics to make more informed investment decisions.
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