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London Stock Exchange Group PLC LSEG

Rating as of

Morningstar’s Analysis

Valuation
Currency in GBX
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

LSEG Posts Revenue Ahead of Long-Term Guidance; Market Sentiment Unduly Negative in Our Opinion

Niklas Kammer, CFA Equity Analyst

Analyst Note

| Niklas Kammer, CFA |

Wide-moat London Stock Exchange Group, or LSEG, reported revenue of GBP 1.70 billion for the third quarter, up 7.60% on an underlying and constant currency basis. While this performance is well ahead of our expectation for the full year of 4.20% growth and even ahead of the group’s guidance of 4%-5% growth, its share price responded poorly, dropping 4% in the first hour of trading. Potential drivers of this reaction are: management highlighting it expects growth to slow in the fourth quarter, supply chain issues delaying some of its tech-related spending, a core driver of its growth this quarter stemming from its capital markets business rather than data, and an embarrassing outage on it its own website displaying market data. We don’t believe either of these points warrant a decline in share price as we either believe they are not material to fundamentals or are already baked into our assumptions. We don’t change our fair value estimate of GBX 9,200 per share and wide moat rating and believe LSEG offers great value for investors looking for a high-quality and well-diversified business with a strong growth outlook.

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Company Profile

Business Description

London Stock Exchange Group is a fully integrated financial exchange company covering the financial market value chain from primary and secondary markets across multiple asset classes over data, index and analytics down to clearing and post-trading reporting. With the acquisition of Refinitiv, LSEG generates about two thirds of its revenue from data and analytics including its FTSE Russell and WM/Refinitiv benchmarks as well as data feeds and terminals. The group is also a majority shareholder in Tradeweb, one of the dominant global fixed income trading venues, as well as LCH, the largest clearing house for over-the-counter swaps globally.

Contact
10 Paternoster Square
London, EC4M 7LS, United Kingdom
T +44 2077971000
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Sep 30, 2014
Fiscal Year End Dec 31, 2021
Stock Type
Employees 1,907