UBS raises Thomson Reuters to Buy

In its Q3 results on Thursday, Thomson Reuters reported quarterly revenue fell in its markets and legal businesses as customers cut costs in the wake of the financial crisis, but it said the worst was over. 

"We believe investors will see through the lagging financial results and focus on the recovery of the underlying business drivers," analyst Phillip Huang said in a note. He raised his price target on the stock to $37.50 from $23.50.

Huang said he expected the underlying drivers for the business to notably improve over the next 12 months due to increasing visibility of stabilisation in the headcount for the financial and legal sectors.

There were uncertainties in the near term, however, as he expected the company's financial results to remain volatile.

"We have yet to see the full impact of the downturn reflected in the financial results for Markets and Legal given the late cycle nature of the subscription business," Huang said. Thomson Reuters shares are attractive despite these uncertainties because the rewards outweigh the risks.

In New York on Friday, Thomson Reuters shares were slightly lower at $32.07. ■