London Stock Exchange PLC shares fell 3.6% as UBS cut its price target to £85 and took the stock off its buy list.
The broker said its view on the company has improved in recent months but the downgrade reflects: 1) reduced earnings forecasts due to the rise in sterling; 2) the shares are trading at the upper end of its 18-month trading range of £70-£85; and 3) the upcoming stock overhang as the lock-ups on the 35% stake held by Blackstone/Thomson Reuters begin to unlock.
UBS is more confident the group can generate annual revenue growth of 6% to 7% in the coming three years but feels this improved execution is largely priced into the share price.
It lowered 2023-25 earnings per share estimates by 5-6% largely to reflect the recent weakening of the US dollar which fed through to a 6% decline in its price target to £85.
The broker lowered its rating to neutral from buy.