London Stock Exchange Group sees upgrade by RBC ahead of results

Analysts have raised their ratings for London Stock Exchange Group (LSEG) ahead of the company's full-year results scheduled for next week, with expectations that a new share buyback initiative might be unveiled.

In a research note released today, experts at RBC Capital Markets elevated LSEG's price objective from 11,600p to an optimistic 12,500p, as reported by City AM.

Currently trading at around 11,680p, the stock has climbed over 32% in the past twelve months.

"Despite strong recent performance, we believe the shares are well positioned to perform over 2025, with earnings per share growth and re-rating potential both serving as potential drivers," commented RBC analyst Ben Bathurst.

Further propelling the favourable outlook is the anticipated deregulation and global uncertainty since Donald Trump’s ascension to the US presidency, situations which Bathurst noted tend to increase reliance on comprehensive market data.

Amid persistent unease about the number of entities delisting from the London Stock Exchange, the institution earns a mere fraction, less than four percent of its gross profits, from equities trade.

Income from bonds and derivatives now generate more than fivefold the £180m accrued from stock dealings throughout the initial nine months of 2024.

Even so, tensions regarding the traditional trading floor's viability have escalated to such an extent that key investors in LSEG are advocating for the organisation to divest its historic trading platform and reinvent itself as a technology enterprise.

Blue Whale manager Stephen Yiu commented last month that LSEG's shareholders "don't really care" about the exchange, and its issues were "overshadowing" the success of its data business. The London Stock Exchange Group's (LSEG) data and analytics division now accounts for roughly two-thirds of its revenue following its deal with Microsoft.

The group's shares are currently valued at 26 times its estimated earnings for 2026, which is 15% lower than other data providers in the market. "Given the improving growth outlook, we believe the argument for LSEG's discount to data provider peers has been further weakened," Bathurst remarked.

Last year, the London Stock Exchange completed a £1bn share buyback programme, and another draw for investors is RBC's anticipation of additional capital returns to be declared in the forthcoming results next week. In a recent research note on Deutsche Boerse, the German stock exchange, Bathurst once again showed a preference for LSEG, citing better prospects for capital return and "clearer re-rating potential" compared to its rival.