On Friday, UBS updated its outlook on London Stock Exchange Group Plc (LON:LSEG:LN) (OTC: LNSTY), raising the price target from GBP101.00 to GBP115.00, while maintaining a Neutral rating on the stock. The adjustment follows a notable performance by the company's shares since the end of September, with a 10% increase.
This growth has surpassed that of its European Union exchange peers, which saw a 2% rise at Deutsche Börse AG (DB1) and a 9% rise at Euronext (EPA:ENX), as well as its United States Information Services (NASDAQ:III) peers, which include MSCI Inc (NYSE:MSCI)., FactSet Research Systems Inc (NYSE:FDS)., S&P Global Inc., and Moody's (NYSE:MCO) Corporation, averaging a 3% increase.
The UBS analyst attributed approximately half of the London Stock Exchange Group's share price increase to the impact of a stronger US dollar, which has appreciated by 7% against the British pound, the reporting currency of LSEG. The analysis suggests that the currency fluctuation has been a significant factor, considering that around 70% of LSEG's EBIT (Earnings Before Interest and Taxes) is generated in US dollars.
The London Stock Exchange Group's third-quarter results of 2024 were favorably compared to its US counterparts, further supporting the firm's decision to adjust the price target. The positive performance of LSEG's shares reflects the company's resilience and adaptability in a dynamic currency exchange environment.
The UBS analyst's comments highlight the influence of currency movements on multinational companies like LSEG, where earnings generated in different currencies can significantly affect the perceived performance and valuation of a company. The raised price target reflects the analyst's revised expectations for the stock, considering these currency-driven earnings impacts.
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