Analysts at Berenberg, Gossler & Co indicated on Wednesday that artificial intelligence should not be seen as a threat but instead viewed practically.
“The specialisation of markets creates strong barriers to entry, meaning that AI should be an opportunity, not a threat,” analysts at Berenberg said in a broker note on Wednesday.
The bank’s analysts are bullish about the ability of RELX PLC (LSE:REL), which provides information-based analytics and decision-making tools to manage risk as well as being an academic publisher, to swerve AI-related competition.
They said the company has “seen an improvement to its underlying growth trajectory, above and beyond a COVID-19 catch-up", adding that they expect further growth to be a “permanent shift” as its revenue mix moves to analytics from print.
“RELX is now growing faster than it was before the COVID-19 pandemic, even if the bounceback in Exhibitions revenue is excluded,” its analysts said.
This trend is driven by more exposure to analytics revenues at the company and diminishing print revenue that now stands at just 5% of group revenues.
RELX’s revenue split in the first half of 2023 included 35% across its business risk division, 33% in its scientific, technical and medical business segment, 12% across exhibitions and 20% legal.
The analysts said the company’s experience in insurance and financial services, legal markets and academic research through its disparate divisions positions it where “deep pre-existing customer understanding” shield it from competition from AI.
“RELX’s expertise in analytics and technology position it to be a beneficiary of the long-term structural growth in AI, in our view,” they said, adding: “AI and machine learning are core competence areas for RELX in curating the vast data sets that form the raw material of its services.”
Berenberg’s analysts recommend buying shares in the company with a price target of 3,270p, highlighting that chief executive Erik Engstrom and chief financial officer Nick Luff are both long-standing executives.
There is still time to buy shares in the analytics company, according to Berenberg analysts, who pointed out that investors investing in 2014 may have missed out on the tripling of its shares after a 40% rise in 2013 if they had considered it too late to invest at the time.