Analyst Has An Eye On Thomson Reuters' 4.0, But Not Happy With Outlook Reiteration

RBC Capital Markets analyst Drew McReynolds downgraded Thomson Reuters Corp TRI to Sector Perform from Outperform at an increased price target of $139 from $135, following Q2 results yesterday. 

The company reported second-quarter FY23 revenue growth of 2% year-on-year to $1.65 billion, slightly missing the consensus of $1.66 billion, and adjusted EPS of $0.84, beating the consensus of $0.77. 

TRI reiterated FY23 organic revenue growth of 5.5% - 6.0% and revenue growth of 3.0% - 3.5% (consensus $6.84 billion).

The analyst sees a slower net sales environment in H2/23 and into 2024 on macroeconomic uncertainty.

Nevertheless, McReynolds believes the company is well positioned to execute GAI integration and monetization given its proprietary datasets, a more agile operating company structure, and ~$10 billion in excess capital. 

The analyst revised the estimate for adjusted EPS to $3.38 from $3.30 in 2023, $3.70 from $3.72 in 2024, and $4.18 from $4.22 in 2025.

Apart from this, maintaining an Equal-Weight rating, both Barclays and Morgan Stanley raised the price target to $135 from $125.

Also, TD Securities increased the price target, keeping a Hold rating.

Price Action: TRI shares are trading down by 4.08% at $131.33 on the last check Thursday.