Shares in London Stock Exchange Group PLC (LON:LSEG) fluttered higher on Monday after RBC Capital kicked off its coverage of the firm with an ‘outperform’ rating and bullish 5,100p price target.
Analysts at the mid-tier Canadian bank reckons LSE benefits from having two large businesses – LCH clearing services and the FTSE Russell information services – occupying leading positions in “sectors with strong secular growth”.
READ: LSE to increase stake in LCH for €438mln as third quarter revenue misses expectations
RBC is forecasting “high single-digit” growth in LCH with the clearing of mandated products yet to reach its ceiling.
“In particular, we expect electronic trading and (related) client clearing demand to encourage further central clearing, all else equal,” read a note to clients.
As for information services, analysts expect a “considerable deceleration” in top-line growth, from double-digit to high single-digit.
“We would contend that economies of scale and scope advantage FTSE Russell (as well as its largest competitors), relative to smaller competitors, and that the historical record of product innovation, use case proliferation, and likely unfulfilled demand for index-based fixed income products provide a good case for expecting strong growth.”
London Stock Exchange shares were up 1.5% to 3,929p in mid-afternoon trading on Monday. At one point in September, they were worth almost 4,800p.