FTSE 100 tech stock London Stock Exchange Group‘s (LSE: LSEG) found its momentum again. After falling to near £80 in September, it’s soared back up to £98 in the blink of an eye.
I think this may actually be the last chance for investors to snap it up below £100. Because City analysts see it going much higher over the next 12 months, or so.
Why the share price fell
There were two main reasons LSEG shares recently fell. One was that the stock was dragged down by the ‘AI’s going to eat software’ narrative.
The other was that LSEG’s been a little slow to roll out its own AI solutions, which have been developed in partnership with tech powerhouse Microsoft. Investors were concerned that rivals might capture market share.
Investor fears are evaporating
Q3 earnings, posted last week, seem to have allayed some of the concerns here. That’s because they were very solid.
Not only did the company post 6.5% growth in its subscription data business but it also raised its earnings before interest, tax, depreciation, and amortisation (EBITDA) margin guidance. Additionally, it announced a £1bn share buyback.
In terms of AI, the company said it had deepened its partnership with Microsoft. Today, LSEG data is integrated into Microsoft 365 Copilot and agentic AI tools through Copilot Studio.
It also reminded investors that in September, it announced its AI-ready data is available on data platform Databricks, allowing customers to rapidly build and deploy AI agents with confidence in the accuracy and auditability of the data. It entered into a similar partnership with Snowflake in October, enabling customers to embed LSEG data into AI agents powered by its Cortex AI tools.
On the Q3 earnings call, CEO David Schwimmer poured cold water on the idea that AI will hurt its business model. “For those who think AI models can scoop up so-called public data from the internet and displace us, that fundamentally ignores the non-replicable nature of the vast majority of our data,” he said.
Price target increases
Since these results were posted, City analysts have been scrambling to increase their share price targets for the stock. In recent days, analysts at JP Morgan have raised their target price to £133 from £128 while analysts at RBC have gone to £134 from £132.
These targets are 36% and 37% above the current share price respectively. In other words, analysts see the potential for substantial gains in the medium term.
It’s worth noting that while the share price has jumped in recent weeks, the valuation still looks very reasonable. Currently, the stock trades on a forward-looking price-to-earnings (P/E) ratio of 21 – low for a data company.
A blue-chip stock worth considering today
Given the company’s momentum, and the bullish sentiment from City analysts, I believe this Footsie stock’s worth a look today. AI and competition from rivals do remain risks, however the overall risk-reward proposition is very compelling, in my view.
