Nomura Securities Upgrades Thomson Reuters (TRI) to Neutral

Nomura Securities upgraded Thomson Reuters (NYSE: TRI) from Reduce to Neutral with a price target of $40.00 (from $36.50).

Analyst Matthew Walker said, "We are upgrading our rating on Thomson Reuters from Reduce to Neutral. Our original thesis in December 2013 was that the premium to Reed Elsevier was excessive given the company only had 1% organic growth and traded at a P/E of c19x vs c16x for Reed Elsevier. It was also that net sales and Financial and Risk recovery would take longer than expected. Both of these views have played out with the stock now at parity with Reed Plc on P/E and net sales did take longer than expected to become positive. However, with organic growth set to improve to c2% in 2015 and with net sales now positive even in Europe and with the valuation now not at such a large premium, we believe there is no longer a strong case to remain on a Reduce rating. Although the financial business is not yet showing organic growth, the improvement in net sales should mean the decline moderates significantly in 2015 and the second-largest division (Legal) could benefit from a modest pickup in legal market conditions in the US. The buy-back and dividend will continue to be supportive, in our view."

For an analyst ratings summary and ratings history on Thomson Reuters click here. For more ratings news on Thomson Reuters click here.

Shares of Thomson Reuters closed at $39.60 yesterday.

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