Analysts at JP Morgan moved to an ‘overweight’ rating for shares of the London Stock Exchange Group, telling clients that recent share price weakness represented an “opportunity”.
Stock in the market operator and data group had fallen by approximately 20% year-to-date.
Yet if one adjusted for its 52% holding in Tradeweb then the shares were changing hands on just 21 times earnings LSE’s estimated earnings for the 2022 financial year, against the global market infrastructure sector trading on 27 times.
Hence, JP Morgan moved back to an ‘overweight’ on the shares, having previously been ‘restricted’, with a target price of 8,635.0p, down from 10,000.0p when it moved to restricted on 21 December.
The analysts estimated the company’s revenues would grow at a compound annual rate of about 5% over 2020-23, against LSE’s own forecast for growth of 5-7%.
They also anticipated that the group would move back to a net debt/EBITDA ratio of 1-2.0 times, within two years.
LSE was next due to update investors on its Data and Analytics business on 2 July.
