Citi has upgraded RELX PLC (LSE:REL), the data analytics and publishing group, to 'buy' from 'neutral', arguing that a year-to-date de-rating has created a more attractive risk/reward profile for the stock.
The upgrade is part of a broader reassessment of the European media sector, which Citi said has underperformed by approximately 20% year to date as artificial intelligence-related concerns weigh on sentiment.
The bank said it had revisited its valuation frameworks and adjusted target price methodologies across the sector following the FY25 reporting cycle, the evolving AI debate and heightened macro uncertainty stemming from the Middle East conflict.
Alongside the RELX upgrade, Citi raised Rightmove PLC (LSE:RMV), the property listings platform, to 'neutral' from 'sell', citing increased investment that it said supports more sustainable earnings per share growth, with the valuation reset also adding takeover optionality.
The bank moved Auto Trader Group PLC (LSE:AUTO), the used car marketplace, in the opposite direction, downgrading it to 'neutral' from 'buy'.
Citi said softer average revenue per retailer and forecourt expectations were weighing on growth prospects, while dealer cost pressures and ongoing AI-related valuation risk tempered the outlook.
The note reflects a sector-wide tension between deteriorating sentiment and underlying fundamentals, with Citi framing its upgrades as opportunities created by indiscriminate selling rather than changes in the operational outlook for the companies concerned.
European media stocks have been particularly exposed to AI-related fears over the potential disruption of search and advertising markets, as well as concerns over the value of proprietary data and content in an environment of rapidly advancing large language models.
Citi said it continued to distinguish between companies where AI represented a structural threat and those where it could prove a tailwind or neutral factor.