Thomson Reuters may post strong results, say analysts

The analysts raised their price targets on the London- and New York-listed shares of the group and kept their "neutral" stance on the US stock.

"We continue to like the fundamentals of the company but would look for a better entry price into both stocks," they wrote in a note to clients.

The analysts expect the group to report strong results, with potential cost savings and/or some restructuring charges shifting from 2008 to 2009.

But the key risk to the shares is news about financial industry job losses and the market's potential read-through to organic growth at the group's markets division, they said. The markets division includes the Reuters and Thomson news operations as well as financial data and tools for investment banks and other financial firms.

Chief financial officer Robert Daleo said last week that the group's quarterly and annual revenue growth rate would slow, reflecting the effects of the world financial crisis.

J.P. Morgan analysts, however, said any weakness in the group's markets division revenue will be offset by the relative strength in its professional unit, which represented about 60 per cent of profits. The professional division sells databases and other deep information reservoirs to lawyers, accountants, scientists and the healthcare industry.

Cost savings may also largely cushion any markets revenue decline, the analysts added.

They raised their price target on Thomson Reuters’ London shares to 1,750 pence from 1,500 pence, and on Thomson Reuters Corp shares to $26.60 from $26.30. ■