UBS says sell Thomson Reuters shares

In the worst case there is a 50 per cent downside risk to the company’s per share earnings, UBS analyst Jeffrey Fan wrote in a note to clients.

He now expects an 8.5 per cent fall in financial markets revenue from 2009 to 2011, revising a previous estimate of a 5 per cent decline.

“Along with adjustments to Markets cost base and additional restructuring charges, our 2011 earnings per share estimate is downgraded 19 per cent putting us 20-25 per cent below consensus.”

The analyst added that while Thomson Reuters Q2 results (due on 12 August) are expected to be solid, the outlook, which bears significant downside risk, is the key for investors. 

Reiterating his Sell rating, he cut his price target for the Canadian shares to C$28 from C$33.

UBS also cut its target price on the UK shares to 1,260 pence from 1,650 pence.

On the London Stock Exchange, TRIL was the biggest faller in the FTSE 100, closing at 1,245 pence, down 40 pence or 3.11 per cent. On the first day of the merged company, 17 April, Thomson Reuters shares opened at 1,700 pence and closed at 1,560 pence. ■