Jefferies has predicted an acceleration in growth for the London Stock Exchange Group PLC (LSE:LSEG) (LSEG), driven by factors such as positive subscription, retention, and cross-selling trends.
A recent research note also highlighted the potential impact of LSEG's partnership with Microsoft, which is set to enhance pricing power and drive market share gains from late 2024.
The American investment bank upgraded its 2023, 2024, and 2025 earnings per share (EPS) estimates for LSEG by 4%, 1%, and 1% respectively.
The note also mentioned that the initial benefits of the Microsoft partnership should start to materialise in late 2024 or the first half of 2025.
This is expected to contribute to increases in LSEG's Data & Analytics revenue forecasts, as well as a 2% yearly boost in Capital Markets revenue due to a strong outlook for Tradeweb.
There is also potential for further growth from enhancements to Refinitiv. Jefferies points to ongoing success in combining Refinitiv data with LSEG indices, particularly in fixed income, as a major driver of revenue synergy upgrades.
Connecting the FX platforms, Matching and FXall, to Workspace, Tradeweb, and ForexClear offers significant revenue growth opportunities by providing clients with end-to-end solutions.
LSEG is set to start the third tranche of its buyback on March 27, with a £250mln stock repurchase to be completed before the release of its first-half results.
The research note also suggested that LSEG has a preference for targeting larger acquisitions in the future, which would be more resource-efficient.