Reed Elsevier rating upgraded by Investec on valuation and "steady" performance

Investec upgraded Reed Elsevier to 'buy' from 'add', pointing to the recent share price drift.

“Though still at quite healthy levels versus recent history, we believe Reed shares now look more attractive post recent relative underperformance,” said Investec.

It said the stock’s valuation looked more appealing versus B2B peers and likes management’s portfolio approach, which is based on long-term return on capital invested.

Investec said growth looks steady rather than exciting, with full-year 2015 like-for-like sales growth of 3.5% and buybacks of £500m giving an EPS increase of 9%.

It added that Reed’s recent STM (scientific, technical and medical) seminar highlighted strong market share, a well-invested tech platform and high added value.

Investec kept its 1200p price target on Reed unchanged.

At 1350 BST, Reed Elsevier shares were up 1.2% at 1,090p.