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TRI shares downgraded, price target cut

Tuesday 6 November 2012

Thomson Reuters stock has been downgraded following weak third quarter results last week. Saying there are just too many headwinds, capital markets firm TD Securities lowered its forecast to Hold from Buy and cut its price target from C$34 to C$31.

“We are lowering our forecasts for Thomson Reuters (TRI) in the wake of weak Q3/12 results and continuing evidence that it will be at least 2014 before we see a return to positive organic revenue growth for the company’s Financial & Risk (F&R) segment,” analyst Vince Valentini said on Monday.

While the shares were undervalued against Thomson Reuters’ long-term growth potential, Valentini believes “we are still likely 12-18 months away from completion of the product and service overhaul in the F&R segment, and the demand environment in global financial services has remained stubbornly weak”.

He also warned that it was increasingly unlikely that revenue growth would accelerate above three to four per cent in 2014, which he said is the level needed to exceed fixed-cost inflation and thereby drive positive operating leverage.

Thomson Reuters shares traded slightly higher at around C$27.80 in Toronto on Tuesday. Trading over the last 52 weeks was in the range C$26.10 to C$30.40. ■

SOURCE
Street Insider