Investment bank Jefferies expects London Stock Exchange Group PLC's (LSE:LSEG) data and feeds business to lead a re-rating of the FTSE 100-listed firm’s share price.
Jefferies analysts estimate that ‘data and feeds’, which comprises real-time and quantitative market data, will contribute 23% worth of top-line growth in the following two years.
“Crucially, we expect it to provide a major underpinning for the next leg of the group's re-rating journey, which we see as only halfway complete.”
The analysts added: “Unlike Workflows (desktop), which captures a disproportionate amount of airtime, LSEG's data business offers potentially untethered growth, supported by one of the world's largest and most valuable financial datasets.”
Multiple emerging trends in the financial data market “play to LSEG's strengths”, said Jefferies.
The bank highlighted the ongoing cloud migration by exchanges and information services, where LSEG has made strides via its partnership with Microsoft Corp (NASDAQ:MSFT), as a key factor.
“In turn, we expect that to drive increased data consumption with optionality around usage-based pricing.
“Elsewhere, we see the depth and breadth of LSEG's data platform as supporting its leadership in data management outsourcing and the application of advanced technology which increases use cases.”
It all boils down to a bullish thesis on LSEG from Jefferies, leading to an upgrade of the share price from 1,250p to 1,350p.
At the time of writing, LSEG shares were swapping for 1,133p.