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Highlights:
- UBS Upgrade: UBS upgraded London Stock Exchange Group (LSE:LSEG) to "buy" with a price target of 13,500p.
- Valuation Upside: UBS sees 20-25% upside if LSEG narrows its valuation gap with data service peers.
- New Private Market Launch: FCA to introduce the Pisces platform for private companies on the LSE next year.
London Stock Exchange Group PLC (LSE:LSEG) received an upgrade from UBS, with the Swiss bank highlighting strong growth potential and undervaluation relative to industry peers. UBS moved its rating to “buy” from “neutral” and set a new price target of 13,500p, reflecting a 20% upside driven by earnings growth. The bank added that narrowing the valuation gap with other information services providers could push the upside potential to 25%.
UBS emphasized LSEG’s role as a key player in the data services market, positioning it favorably in a sector where valuations remain robust. The group’s diversified revenue streams, particularly its data and analytics divisions, provide resilience and consistent growth opportunities for the coming year.
Separately, the Financial Conduct Authority (FCA) announced consultations on implementing a new matched bargain platform named Pisces, set to operate on the London Stock Exchange. Designed to enhance access to funding for private companies, the platform is expected to launch in 2024.
Simon Walls, interim executive director of markets at the FCA, described Pisces as a transformative step to bridge the gap between private and public markets. Targeted at institutional investors, professionals, and high-net-worth individuals, the platform will exclude retail investors. Walls emphasized that the initiative could provide a stepping stone for private companies looking to transition to public markets while boosting confidence and liquidity.
The move comes as the existing AIM market struggles to meet its objectives of attracting new companies and capital. AIM, historically positioned as the go-to market for smaller firms, has seen reduced activity with many businesses opting for private funding or US listings instead. The introduction of Pisces is expected to address this issue, providing a modernized framework for private capital access and growth.
With both UBS’s upgrade and the FCA’s push for innovation on the London Stock Exchange, LSEG’s prospects look increasingly optimistic for 2024. The group’s strong data-driven growth and evolving market platforms align with broader efforts to reinvigorate the UK’s capital markets. Shares in LSEG remain well-positioned for further gains as the company capitalizes on these developments.
