Numis lifts LSE target price by 11%, but stock "up with events"

Numis Securities has lifted its target price for London Stock Exchange Group (LSEG) by 11% to reflect the integration of the Russell Index business which was acquired through the Frank Russell takeover last year.

The broker raised its target for the shares from 2,074p to 2,300p.

The Frank Russell deal saw LSEG take control of the well-known family of global equity indices, Russell Indices, while the remaining investment management (IM) division of the company is to be sold.

Numis has lifted its valuation for the Russell IM unit from £550m to £760m due to the strengthening of the US dollar and higher assumed valuation multiples.

However, recent press speculation has put a potential bid at around £923m which, if achieved, would add a further 50-60p to Numis’ target price for LSEG.

Despite the target price upgrade, Numis still maintained its ‘hold’ recommendation on the stock, saying it sees no upside at current prices.

The broker said: “We continue to favour LSEGs strong market position, favourable growth drivers and diversified revenue base. Markets are still taking IPOs, the regulatory environment continues to favour clearing and both the FTSE and Russell Index businesses are ideally placed to benefit from the rising demand for low-cost index based products. Consequently, we believe the LSEG is well positioned for this year and beyond.

“However, the share price has rallied strongly and in our view is well up with events.”

LSEG was trading 1.6% higher at 2,500p by 11:36 on Monday.