Wide-moat London Stock Exchange Group LSEG posted a good set of numbers in its third-quarter trading update with income growing 6.6% versus the same period a year ago. In particular, its annual subscription value growth of 7.1%, a leading indicator of LSEG’s growth outlook in its data and analytics segment, eased concerns raised last quarter that the low-hanging fruit in this segment could have been picked already. In the previous quarter, the annual subscription value declined to 6.9% from 7.6% in the first quarter. New products and client wins in the remainder of the year as well as continued high retention figures are expected to further support subscription value growth.
We maintain our fair value estimate of GBX 9,800 per share and wide moat rating.
The reported top-line figures were within our expectations, showing good developments across the core business units in trading and banking (up 2.3%), enterprise data (up 9%), and investment solutions (up 9.5%).
Trends in capital markets were little changed. Equities, both primary and secondary markets, suffered from low activity as did the dealer-to-client foreign-exchange segment. On the other hand, Tradeweb stood out once again, underlining its positive exposure to shifting yield curves as well as its dominant position in investment-grade and high-yield credit. The capital markets segment grew income by 6% organically.
Post-trade benefited from market volatility, which increases clearing volume and lifts demand for auxiliary services. Organically, the segment grew 9.2% on a good showing across the board.
The author or authors do not own shares in any securities mentioned in this article.
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