Thomson Reuters shares 'due for a pause'

RBC Capital Markets, part of Royal Bank of Canada, downgraded the stock from Outperform to Sector Perform, while maintaining a price target at $41.

"While we remain positive on the ongoing turnaround story within F&R [Financial and Risk] and supportive of the company's current capital allocation strategy, we believe the stock is due for a pause and we would be patient for a more timely entry point," they said.

RBC Capital Markets expects some downside potential to Thomson Reuters' earnings as 2015 progresses. The analysts believe consensus estimates for the company this year are too high while those for 2016 are too low.

They said: ”Given the downside risk associated with FX and the timing/commercial adjustment impact of the Thomson One migration, we see the potential for earnings disappointment as 2015 progresses. Looking into 2016, we expect renewed positive operating leverage (the first since 2007/2008) to kick-in, the positive impact of which has historically been underestimated.”

Thomson Reuters shares traded just under two per cent lower at $41.49 in New York and C$51.12 in Toronto on Thursday. Their 52-week price range is $34.07 to $42.64 on NYSE and C$37.24 to C$53 on TSE. ■