Shares in the London Stock Exchange Group PLC (LSE:LSEG) (LSEG) are poised to break out of their two-year trading range of £65 to £85 for the first time since 2021, according to UBS.
The investment bank attributes this predicted growth to three main factors:
- Firstly, concerns over the Blackstone overhang have lessened, especially following the successful placement of a 5% stake in LSEG in March.
- Secondly, LSEG is showing strong revenue growth, particularly in Trading & Banking, with projections for more acceleration in its Data & Analytics division in the upcoming quarters.
- Lastly, UBS predicts that the 35% discount of LSEG compared to US Info Services will lessen in the months to come.
UBS has recently increased its price target on LSEG by 13% to £98, as it has lowered the cost of equity it applies to the firm by 50 basis points to 10.3%.
UBS remains optimistic about LSEG due to its accelerating revenue growth. Moreover, it considers the stock exchange's current valuation attractive and expects it to grow its earnings per share by 12% annually over 2022-25, while its dividends per share increase by 10% per annum.
In morning trade, the share price was trading 1.35% higher at £85.66.
Of the 18 banks and brokerages logged as following LSEG, 15 are positive on the stock. The consensus price target is £97.86.