Investment bank Jefferies has reaffirmed its buy rating on London Stock Exchange Group PLC (LSE:LSEG) shares with a 1,250p price target, implying 22% potential upside from the current price.
Jefferies detailed several growth drivers for LSEG, chiefly its ability to displace competitors.
The bank also noted that the second quarter of 2024 was the strongest in terms of net sales for LSEG in recent years.
Three primary revenue growth pillars were identified by Jefferies: increased price realisation; higher consumption; and the introduction of new products.
LSEG has been enhancing its product offerings, including through its Workspace platform, and transitioning data to Microsoft Azure and other platforms, noted analysts.
This transition, coupled with the launch of consumption-based pricing models in April, is expected to drive revenue growth.
Additionally, LSEG’s upcoming Data-as-a-Service (DaaS) platform, which will be rolled out in the second half of 2024, represents another potential area for future growth.
Jefferies believes that LSEG’s stock has further potential for re-rating, estimating that the company could see its price-to-earnings ratio rise to 30 times, assuming the projected 8-9% annual subscription value growth materialises.
Currently, the stock trades at a P/E ratio of 25.5.