Following the London Stock Exchange Group PLC (LSE:LSEG) Innovation Forum, UBS reiterated its 'buy' rating on the exchange operator and data provider, describing the event as a “positive” that showcased the company’s product pipeline and AI positioning.
The bank, which kept its 11,000p price target, noted that as well as progress within its Microsoft partnership, LSEG presented several new developments, including the World Check One automated risk screening tool, PISCES post-trade platform for securities processing and settlement efficiency, and the AI-driven Smart Clearing tool for optimising and automating central counterparty clearing operations.
While some delays were acknowledged, the Open Directory is due to launch soon, starting with the FX and commodities community.
LSEG highlighted its open access approach to AI and its growing list of partners – including Databricks, Snowflake and Claude – as a sign the group views AI as a distribution channel, not a competitive threat.
Client relationships are also deepening, with data access agreements now expected to drive 17% of annual subscription value by year-end, if it signs all contracts under negotiations, up from 9% at the end of 2024.
These agreements have resulted in an average 500 basis points of improved growth compared to the three-year annual growth before an agreement is signed. "This should deepen LSEG's moat," said UBS.
Analysts at the Swiss bank forecast strong EPS growth through 2028 and said the forum "should help erode the view that LSEG's business model is at threat from AI".