UBS has reiterated its 'buy' rating on London Stock Exchange Group PLC (LSE:LSEG) despite a 10% drop in the share price, citing strong fundamentals and undervaluation relative to peers.
The sharp decline, which has pushed LSEG shares down 34% since the end of 2024, was attributed to broader market rotation and fears of artificial intelligence-driven disruption.
However, UBS dismissed these concerns as overblown, arguing that LSEG is more likely to benefit from rising AI-related data consumption.
The group partners with major AI platforms, including OpenAI, Databricks and Snowflake, and its MCP server already feeds financial data into AI models.
The broker noted that LSEG’s Data & Analytics division is now being valued by the market at just 7x 2026 earnings — roughly a 50% discount to comparable peer FactSet — and that the stock trades on a 2027 P/E of 14x and offers a free cash flow yield of 7.9%.
Despite these attractive metrics, UBS acknowledged that investor sentiment remains constrained by technical factors, AI overhangs and limited visibility on execution.
It described LSEG as a “show-me story” and said management must provide tangible evidence of pricing power, monetisation of partnerships and AI-driven growth.
UBS set a 12-month price target of 11,000p, implying a forecast upside of 55% from the current share price of 7,001p, down 2.8% on the day.