Analyst Note| Colin Plunkett, CFA |
Narrow-moat Thomson Reuters generated year-over-year organic revenue growth of 2% this quarter. Excluding its less material businesses and focusing on the “Big 3” segments of legal, corporate, and tax, the company generated organic revenue growth of 4%, a slight sequential decrease from the previous quarter leading to adjusted earnings of $0.48 per share, a 33% improvement from a year ago. Given the economic slowdown, Thomson Reuters lowered 2020 fiscal guidance. Previously, the company had anticipated organic revenue growth in the range of 4%-4.5% and free cash flow of $1.2 billion. Now, the company expects organic revenue growth of 0%-1% and free cash flow of $1 billion. We are lowering our fair value estimate to $60 per share from $62 as a result of this.