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Thomson Reuters (NYSE:TRI) is 3.7% higher Friday – on pace to break a five-session losing streak – after an upgrade to Sector Outperform at Scotiabank.
Shares had fallen 2% Thursday in the wake of an earnings report where it beat profit expectations but cut its 2023 revenue forecast.
Scotiabank’s reaction to the report is mostly neutral, saying it showed continued momentum in the company’s “big three” segments that led to beating expectations for earnings per share and EBITDA.
And while the company trimmed its free cash flow guidance for 2023, that’s related to recent divestitures and new investments, and not due to existing business performance, the bank said.
“With close to 80% of total revenues coming from recurring streams supported by multi-year contracts, we remain confident in the business growth stability in F23,” analyst Maher Yaghi said. “On top of that, we commend management’s disciplined approach in balancing growth initiatives and shareholder returns.”
Potential monetization of more of Thomson Reuters’ holdings in London Stock Exchange Group is an “important catalyst” for the stock, Yaghi said.
Combining that with the company trading at a discount to peers on an enterprise value basis leads to the upgrade and a lift in its price target to $127.
For more on Thomson Reuters earnings, dig into Seeking Alpha’s transcript of the company’s earnings call.
