Morgan Stanley (NYSE:MS) thinks Relx PLC (LSE:REL) and Informa PLC (LSE:INF), two of the FTSE 100's less heralded media stocks, are going to be the winners in a data-driven/artificial intelligence (AI) world.
The investment bank, which added Netherlands-based Wolters Kluwer to its list, said the trio were “high-quality businesses forming the foundations of the data economy offering structural mid-single-digit percentage growth, high and durable margins, high cash conversion, and with strong market positions”.
For Relx and Wolters Kluwer, managing data and technology are core competencies and MS sees clear opportunities stemming from the latest AI wave, generative AI.
Relx and Wolters Kluwer combine proprietary data with large, multi-sourced datasets and add further value through opinionated content, analytics, or workflow tools, the bank explained.
“Together, this creates significant barriers to entry and we see new AI use cases as strengthening their moats over time,” it said.
As the number one events organiser globally, Informa does not have as clear generative AI revenue opportunities, but their digital transformation holds promise, MS said.
Their event audiences are inherently engaged and a significant source of first-party data, it noted.
For Relx, the bank has lifted its legal segment organic growth forecasts to around 7% across 2024-26, above consensus which is at around 5%.
At Wolters Kluwer, given around 45% of revenue is generated from software, forecasts have been increased for adjusted EBIT to around 4%-5% above consensus.
The broker also sees scope for broader cost savings across the three companies from generative AI.
At Informa, the bank does “not model any specific uplifts”, given the nascent stage of their digital strategy build-out, “but if successful we see potential for a pathway to unlocking our 1,000p bull case over time”.
The bank rates Relx and Wolters Kluwer ‘overweight’ and Informa ‘equal-weight’.
Shares in Relx are up 1.9%, Wolters Kluwer is up 1.9% and Informa is up 2.2%.