Shares in LSE Group (LSEG) gained 4.8% to £81.66 after the firm raised its medium-term growth targets and its share buyback. The news came alongside results for FY25 showing steady if unspectacular growth across the business.
| Share price: £81.66 (+4.8%) | PE: 19.4x |
| Market cap: £38.8bn | Yield: 1.8% |
Small earnings beat
The group, which owns the London Stock Exchange, posted a 5.5% increase in total revenue to £9.35 billion last year. That matched the company-compiled consensus of £9.34 billion, while adjusted EPS of 420p beat the 415p forecast.
Revenue from Data & Analytics, which accounts for over 40% of group income, increased by 5% in line with estimates. Revenue from FTSE Russell, the index provider, and Risk Intelligence, representing 16% of income, increased by 7% and 11.7% respectively.
The Markets business, of which equity trading and the stock exchange itself are a minor part, increased revenue by 8.9%. Average subscription value across Data & Analytics, FTSE Russell and Risk Intelligence rose by 5.9% during the year.
CEO David Schwimmer flagged up the firm’s strategic progress and an increase in clients signing long-term data and workflow contracts. Schwimmer also flagged the firm’s trusted partner status as a data provider ‘as the use of AI in decision-making scales’.
Guidance and buyback increased
For FY26, the group guided for revenue growth ex-recoveries of 6.6% to 7.5%, above the 6.7% consensus forecast. It also set an adjusted EBITDA margin target of 51.1% to 51.3%, in line with analysts’ forecasts.
For the medium term, from 2027 to 2029, the group set out new financial guidance. Revenue is seen rising mid to high single digits while EBITDA margins are seen rising by 1.5% over the period.
Meanwhile, having bought back £2.1 billion of shares last year, the group committed to buying back £3 billion this year. The firm has been under pressure from US activist Elliott Management to review its operations and buy back £5 billion of shares.
It feels as though LSEG and Schwimmer have bought themselves some breathing room with these results and the raised guidance. Interestingly, there is no mention of Elliott in today’s announcement, but analysts are sure to have questions later on.
When asked about the activist’s demands by Bloomberg, Schwimmer said the group was ‘open to discussions with all stakeholders’. He added that some investors have a long-term attitude, while ‘others take a short-term attitude and prefer financial engineering’.
Read the press release here: https://www.lseg.com/en/investor-relations
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