Shares digital

by Susanna Twidale

The financial information behemoth Thomson Reuters, formed by the merger of the two companies has failed to inspire analysts who issued a flurry of negative notes on its launch on the London market.

ABN Amro’s Paul Godden, Barclay’s Amanda Purton and Collins Stewart’s Gareth Thomas all slapped sell ratings on the stock immediately with Credit Suisse’s Simon Baker the solitary positive voice, albeit with a far from overwhelming outperform rating.

‘Thomson Reuters has a portfolio of excellent businesses, but performance will be dominated by the Markets division,’ says Gareth Thomas. ‘Given the fragile outlook for the financial markets industry, the risks to he Market’s division’s forecasts is to the downside, and that is before factoring any execution risk from the merge,’ he says.

‘This is not a helpful backdrop for the market-data industry, which accounts for 60% of Thomson Reuters’ proforma revenue and is a fixed cost business,’ concurred ABN. The Credit Suisse optimism is based on the premise that the US economy will enjoy a soft landing, that the shares are already below its worst case discounted cash flow valuation and the potential for additional cost saving synergies.

However, it still prefers Reed Elsevier in the professional publishing sector, and shares in the company plummeted 14% to £15.60 on its debut.