LSEG shares slump nearly 7% as group expects muted Q4 2021

Highlights 

  • London Stock Exchange Group Plc shares slumped nearly 7% on Friday, 22 October
  • The stock was the biggest loser among the 101 constituents of benchmark FTSE 100
  • Shares of LSEG stand with a year-to-date (YTD) loss of at least more than 15%

Shares of London Stock Exchange Group Plc (LON: LSEG) slumped approximately 7% in the trade on Friday, 22 October, after the corporation showcased an expectation of muted revenue growth in the fourth quarter of the present fiscal year.

Comment by LSEG Plc CEO on Q3 2021 results

The stock cracked sharply in the opening deals, dropped further in the early afternoon session followed by the immense selling pressure. Shares of LSEG emerged as the biggest losers among the 101 constituents of benchmark FTSE 100, on the day when most of the heavyweight companies led the index in the upwards direction.

It happened for the first time after couple of weeks, when all of the top 10 companies by market capitalisation in the FTSE 100 traded in the positive region with the shares of market cap leader AstraZeneca Plc (LON: AZN) contributing the most to the surge, while stock of Rio Tinto Plc (LON: RIO) advanced the most.

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According to the latest data available with the London Stock Exchange, the stock of LSEG crashed as much as 6.82% to an intraday bottom of GBX 7,532 from the previous closing price of GBX 8,084, apiece.

London Stock Exchange Group shares on Friday, 22 October

LSEG shares (22 October)

Source: REFINITIV

With today’s fall, the stock of LSEG stands with a year-to-date (YTD) loss of at least more than 15%.

CEO commenting on financials of LSEG Plc

Higher than usual trading volumes were seen in the shares of LSEG on Friday as the stock exchanged over 300 thousand hands, translating into a total traded turnover of more than £22 million, as at 13:23 BST.

On the other hand, the stock of AstraZeneca rose 1.59% to a day’s peak of GBX 9,004 from the last closing price of GBX 8,863, while Rio Tinto shares jumped 2.05% to an intraday high of GBX 4,744.50 from the previous closing of GBX 4,649 per share.

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The group has managed to report a sizable growth in the third quarter with the net income, as well as gross profit witnessing a growth of more than 7% in constant currency terms. The total income for the corporation, excluding the recoveries, for the July-September period came in at £1,693 million, up 1.7% from £1,665 million during the similar quarter of previous fiscal. The gross profit surged 2.4% £1,555 million in Q3 of 2021 from £1,519 in Q3 2020.

According to the group, there has been “good progress” on the integration of Refinitiv as the company launched 10 new products in Q3 2021 fulfilling the broader objective of revenue synergy programme. In the YTD period, the group stands with 37 product launches and remains on target for full year run-rate cost synergy delivery of £125 million.

As anticipated earlier, LSEG is expecting a full year revenue growth from 4% to 5% as the total income in the Q4 of 2021 is not likely to grow as fast as it grew in Q3 on a constant currency basis. This is largely due to the strong comparator in Q4 of 2020, the group said in a regulatory filing.

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The entity is expecting supply chain headwinds to “impact timing of some technology spend” in the year ahead, while the previous cost or capital expenditure guidance remains unchanged.

On the contrary, the group expects the foreign exchange trading is well-positioned for continued growth in the upcoming quarters. The scheduled migration to new technology is likely to strengthen FX trading further, ameliorating the overall expansion in electronic trading.

During the corresponding quarter, the data & analytics revenue rose by 6% as the growth in annual subscription value increased to 4% at the end of September quarter from 3.9% at the end of first half. This factor reflects the strength in subscription-based new business wins, said the corporation.

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As per LSEG, the data and analytics division continues to perform well, the revenues are expected to increase by 4-6% YoY over the medium term.

The revenue linked to the capital markets division witnessed a double-digit growth, with the amassing a surge of 17.2% at Tradeweb, followed by the good dealer-to-client volumes at FXall and strong primary issuance within the equities. In constant currency terms, the group has managed to post a growth of 5.6% in the total income on a YTD basis.

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