Company Reports

London Stock Exchange Group, or LSEG, reported a good first half year. Total income was up 5.4% to GBP 4.204 billion with the second quarter, showing a step up from the first. Over the first half year, capital markets, risk intelligence, and the index business FTSE Russell stood out positively with double-digit organic growth rates. Data and analytics, LSEG's largest segment, showed decent organic growth at 4.3%, driven primarily by its strong data and feeds offering. Workflows (up 2.4%) had a decent half year as the exchange group booked further client wins and improved its retention metrics. In the second half of the year, the collaboration with Microsoft is expected to throw off its first deliverables in the form of greater access to data sets and easier integrations into clients' workflows. LSEG expects greater ability to price for enhanced products as well as greater data consumption as a result of how it makes its data sets available to its clients. As we have argued in the past, we believe that LSEG bought valuable intellectual property with acquisition of Refinitiv, much of which was underutilized in the past. The collaboration with Microsoft is the correct step, in our view, to unlock this potential. We maintain our GBX 9,800 per share fair value estimate and wide economic moat rating.

The London Stock Exchange Group, or LSEG, has doubled down on its market data and analytics strategy. After the Refinitiv acquisition, the new group is now vertically integrated from pretrading data and analytics over trading venues down to post-trade clearing and reporting, albeit dominated by its data business. Importantly, its assets form a strong symbiotic relationship wherein intellectual property generated within one strengthens the offering of the other, inducing demand for the group’s services.

We maintain our GBX 9,800 per share fair value estimate for London Stock Exchange Group after its first-quarter trading update release, which was in line with expectations. Total income of GBP 2.182 billion in the quarter matched consensus estimates collected by the exchange group prior to the release exactly. On a constant currency basis, income growth of 7% was good, supported by a strong quarter for Tradeweb, strong inflows into FTSE Russell-related products, and a good performance in OTC derivatives clearing. Our wide economic moat rating for London Stock Exchange Group is unchanged.

We maintain our GBX 9,800 per share fair value estimate for London Stock Exchange Group after it posted a good set of results. Total income of GBP 8.01 billion in 2023 (up 8% versus a year ago) was supported by a good performance across its three main segments. Particularly noteworthy, London Stock Exchange’s exposure to the rapidly expanding and successful Tradeweb fixed-income business has resulted in an outstanding 6% income growth in the capital markets segments. Other European exchange groups were not as successful in offsetting weaker performances in primary and secondary markets in 2023. Our wide moat rating is unchanged.

Wide-moat London Stock Exchange Group posted a good set of numbers in its third-quarter trading update with income growing 6.6% versus the same period a year ago. In particular, its annual subscription value growth of 7.1%, a leading indicator of LSEG’s growth outlook in its data and analytics segment, eased concerns raised last quarter that the low-hanging fruit in this segment could have been picked already. In the previous quarter, the annual subscription value declined to 6.9% from 7.6% in the first quarter. New products and client wins in the remainder of the year as well as continued high retention figures are expected to further support subscription value growth.

London Stock Exchange Group had an overall good first half in 2023. Adjusted EBITDA for the first six months came in at GBP 1,872 million, 2% below consensus estimates, driven by higher-than-expected operating expenses (21% adjusted and 6% on organic basis) due to inflationary pressures. Income growth (12%) remains good, however, as the exchange group showed growth across all segments. We maintain our GBX 9,800 per share fair value estimate and wide moat.

Wide-moat London Stock Exchange Group posted a good trading update with total income growing 7.5% to GBP 2,007 million roughly in line with GBP 1,980 million consensus estimate collected by the exchange group prior to the release. Continued good performance in the data and analytics segment (up 7.8% excluding Russia/Ukraine impact) and strong growth in posttrade (up 16.8%) on heightened market volatility in the quarter are noteworthy. The trading and banking solutions, respectively growing 2.6% and 3.1% organically, have now firmly established a growth trajectory. The supposedly bleak outlook of these business units has been one major argument brought forward by bears on LSEG for why the Refinitiv deal was ill-advised. We have continuously highlighted that although the transformation toward growth will not happen overnight, we believe that LSEG is well positioned to compete effectively in trading and banking. As LSEG continues to execute on its strategy, we see arguments justifying the discrepancy between LSEG's share price and our fair value estimate of GBX 9,800 per share dwindling. Shares remain undervalued. Our fair value estimate remains unchanged.

We maintain our GBX 9,800 per-share fair value estimate for wide-moat London Stock Exchange Group after a set of in-line results. Total income excluding recoveries came in at GBP 7,428 million, matching consensus estimates of GBP 7,402 million as collected by the exchange group prior to the release. Alongside a solid underlying performance supported by the weaker British pound working in LSEG’s favor; confident guidance for 2023, further synergy achievements from the Refinitiv acquisition, and higher shareholder distributions were noteworthy. While all three exchange groups we cover trade at a discount currently, we believe LSEG offers the greatest value while also edging out its peers in competitive positioning as well as organic growth opportunities.

Wide-moat London Stock Exchange Group reported a good third-quarter trading statement. Headline numbers were strong with total income growing 14.8% to GBP 1,985 million versus the same period a year ago. Excluding the foreign exchange impact of the depreciating British Pound, which is a benefit to LSEG, the exchange group still posted a solid 5.9% growth at constant currencies. Guidance remained unchanged, and we maintain our GBX 9,800 fair value estimate.

Wide-moat London Stock Exchange reported a good and largely uneventful first-half 2022. Revenue on an underlying basis, excluding foreign-exchange movements, grew 6.2% to GBP 3,240 million. This is close to our 6.6% revenue growth assumption for the full year. Integration of Refinitiv is progressing nicely, with LSEG showing confidence that it can achieve synergies slightly earlier than previously expected. This comes after the group already lifted expected cost synergies from GBP 350 million to GBP 400 million at the beginning of the year. The turnaround in trading and banking solutions is also on track as trading posted its first quarter of growth after years of decline. We maintain our GBX 9,800 per share fair value estimate. Shares in LSEG have appreciated about 21% since the beginning of the year and we believe there is about 17% left on the table.

Wide-moat London Stock Exchange Group reported its first-quarter set of revenue. On an underlying basis, total revenue grew 6.3% to GBP 1,751 million as the group showed a good performance throughout its businesses. Data and analytics, London Stock Exchange Group’s flagship, delivered a solid 4.5% growth carried by strong performances in enterprise data solutions and investment solutions. Additionally, increased market volatility and changes in interest rate expectations benefited its post trade over-the-counter clearing operation (up 7.5%), the fixed income business Tradeweb (up 15.2%), and drove a good performance in its equity capital markets (up 10%).

Wide-moat London Stock Exchange Group, or LSEG, announced the divestment of BETA+, its securities processing and tax reporting business within its wealth solutions segment, to Clearlake Capital and Motive Partners. In return for BETA+, LSEG will receive a total cash consideration of $1,100 million and will retain a long-term partnership with BETA+ under its new ownership. As LSEG already sits within its leverage target of enterprise value/adjusted EBITDA between 1 and 2 times, a large portion of the proceeds will be designated for share buybacks expected to commence in the third quarter this year. At current prices, the total proceeds from the transaction represent about 1.8% of LSEG’s market cap. We maintain our GBX 9,800 per-share fair value estimate.

Wide-moat London Stock Exchange Group, or LSEG, reported adjusted earnings per share of 287 pence versus the 258 pence we had been expecting for full-year 2021. Performance was strong across the board, in particular with volatility around omicron and interest-rate expectations yielding better-than-expected results for the group. Progress was also on display in its data and analytics business, which we believe is encouraging. Overall, LSEG has delivered on its 2021 targets and already shows good momentum into this year. We have digested these good results and rolled our model one year forward, raising our fair value estimate to GBX 9,800 from GBX 9,200 per share. We believe shares in LSEG are attractive and investors looking for a wide-moat business with an Exemplary capital allocation rating should not look past this opportunity.

The London Stock Exchange Group, or LSEG, has doubled down on its market data and analytics strategy. After the Refinitiv acquisition, the new group is now vertically integrated from pretrading data and analytics over trading venues down to post-trade clearing and reporting, albeit dominated by its data business. Importantly, its assets form a strong symbiotic relationship wherein intellectual property generated within one strengthens the offering of the other, inducing demand for the group’s services.

Wide-moat London Stock Exchange Group, or LSEG, reported revenue of GBP 1.69 billion for the third quarter, up 7.6% on an underlying and constant currency basis. While this performance is well ahead of our expectation for the full year of 4.2% growth and even ahead of the group’s guidance of 4%-5% growth, its share price responded poorly, dropping 4% in the first hour of trading. Potential drivers of this reaction are: management highlighting it expects growth to slow in the fourth quarter, supply chain issues delaying some of its tech-related spending, a core driver of its growth this quarter stemming from its capital markets business rather than data, and an embarrassing outage on it its own website displaying market data. We don’t believe either of these points warrant a decline in share price as we either believe they are not material to fundamentals or are already baked into our assumptions. We don’t change our fair value estimate of GBX 9,200 per share and wide moat rating and believe LSEG offers great value for investors looking for a high-quality and well-diversified business with a strong growth outlook.

London Stock Exchange Group has announced the closure of its derivatives trading segment, CurveGlobal. In 2016, LSEG launched the joint venture with seven investment banks and CBOE in an effort to challenge Deutsche Boerse’s and Intercontinental Exchange’s dominance in the European fixed-income derivatives market. We maintain our fair value estimates for LSEG and Deutsche Boerse of GBX 9,200 per share and EUR 150 per share, respectively. Our wide moat ratings for both exchange groups are also unchanged.

Wide-moat London Stock Exchange Group, or LESG, reported first-half results of GBX 146 per share, up 19% on a pro-forma basis versus last year. Overall, we view the performance as solid. On an underlying basis, revenue climbed 4.6% to GBP 3.4 billion driven by good performance in data and analytics as well as capital markets. This compares well with a targeted revenue CAGR between 5% and 7% over the next three years, while revenue synergies have not yet kicked in. Operating costs climbed only 1.1% over the same period, boosting adjusted EBITDA performance (49% margin in first-half 2021 versus 46% in first-half 2020), but costs are expected to ramp up in the second half.

With the acquisition of Refinitiv, the London Stock Exchange Group, or LSEG, has doubled down on its market data and analytics strategy. The new group is now vertically integrated from pretrading data and analytics over trading venues down to post-trade clearing and reporting, albeit dominated by its data business. Importantly, its assets form a strong symbiotic relationship wherein intellectual property generated within one strengthens the offering of the other, inducing demand for the group’s services.

During its first of two investor days this year, London Stock Exchange Group, or LSEG, dived into its newly assembled data and analytics business. In focus were LSEG’s trading and banking, enterprise data solutions, and customer and third-party risk solutions segments. In October another investor day will cover investment solutions, wealth solutions, and its foreign-exchange trading venues. We had marked this event as a possible opportunity for management to shed light on its operating and capital expenditure outlook as well as potential synergy updates, which we believe are at the center of investors’ concerns. In this respect, our expectations fell flat as management promised to give a full update on these topics at the second-quarter results on Aug. 6. However, commentary by management during the call gives us confidence that risks to our fair value estimate sit on the upside. For now, we maintain our GBX 9,100 per-share fair value estimate and wide moat rating. Shares look undervalued.

London Stock Exchange Group, or LSEG, released its customary revenue-only first-quarter results, the first after closing its landmark Refinitiv acquisition. Overall, performance was good considering multiple moving pieces and difficult comparable bases in many business lines from 2020. Total income, excluding recoveries on an underlying basis, grew 4% carried by almost 5% growth in LSEG’s largest segment data and analytics. Sticking out to us positively was the flat underlying performance in trading and banking solutions, a segment which is the largest pain point for LSEG currently. The post-trade segment had a 1% decline in revenue year over year, which is decent given the high clearing activity and a spike in net treasury income the same period a year ago. Capital markets comparability is low given the high volatility base last year in equities and foreign exchange as well, but fixed income and derivatives trading showed a stellar 13% growth.