LSEG shares rise as London stock exchange owner forecasts 8% growth this year

By Louis Goss

London Stock Exchange Group PLC on Thursday said it is on course to hit the upper end of its guidance after posting what company CEO David Schwimmer described as "strong, broad-based growth" in the third-quarter.

The firm that owns the U.K.'s main stock exchange (UK:LSEG) said in a trading update that its third-quarter income increased 8% year-on-year to GBP1.97 billion ($2.38 billion), after strong growth across all three segments of its business.

The London firm's reported income was bang in line with expectations from three analysts, according to data from Factset. LSEG share rose 2%, after gaining 10% over the past 12 months.

The exchange operator said it now expects 2023 growth will be at the "upper end" of its current guidance of 6% to 8%, and reiterated all current guidance, including around earnings.

Barclays' analysts, led by Claudia Gilbert-Allen, say they are bullish on LSEG, based on its exchange-sector-leading earnings per share compound annual growth rate, scope for fresh guidance increases and what they view as attractive valuation. "The stock been solid year to date," they said.

The stock exchange group's income growth was largely driven by a 7.2% uptick in revenue from its Data & Analytics segment, which currently accounts for the bulk its revenues following the $27 billion acquisition of Refinitiv in February 2021.

Refinitiv, which was formerly owned by Thomson Reuters, currently generates more than $6 billion worth of revenues a year, meaning it now accounts for most of LSEG's revenues. LSEG is expected to generate GBP8.17 billion in sales this year, according to 14 analysts polled by Factset.

LSEG's annual subscription value (ASV) also showed recovery, in a turnaround that is set to reassure investors, after the closely-watched figure that refers to the company's recurring revenues from its Data & Analytics business, dipped in the second-quarter.

The stock exchange owner said its ASV is now up 7.1%, due to improving sales, higher prices, and rising customer retention rates, after it dropped from 7.6% in the first quarter to 6.9% in the second quarter, in a shift the company blamed on "timing differences."

The uptick in the ASV figure is set to reassure investors about the company's trajectory, as a core indicator of the performance of LSEG's most lucrative segment.

Income from LSEG's Post-Trades segment also grew 17%, to GBP286 million, as income from its Capital Markets division, which includes the London Stock Exchange itself, jumped 6.2% to GBP375 million.

-Louis Goss

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-19-23 0905ET

Copyright (c) 2023 Dow Jones & Company, Inc.