Thomson Reuters Q3 Revenue Rises; Shares Pop

Shares of Thomson Reuters (TRI) were up in early trading Tuesday after the provider of business information services reported higher revenue but swung to a loss in the third quarter.

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Total revenues came in at $1.53 billion for the quarter ended September 30, an increase of 6% from $1.44 billion in the prior-year quarter.

The company reported a loss of $240 million ($0.49 per diluted share) in Q3 2021, compared with a profit of $241 million ($0.48 per diluted share) in Q3 2020. The loss is due to a decline in the value of its investment in the London Stock Exchange Group.

On an adjusted basis, which excludes the change in value of its LSEG investment as well as other adjustments, Thomson Reuters earned $0.46 per share, up from $0.39 in the prior-year period.

Thomson Reuters president and CEO Steve Hasker said, “The momentum we saw in the first half of the year continued into the third quarter with revenue and sales performance above our expectations and consistent across the business. This strong performance reflects how our products fit the needs of our customers, enabling them to better serve their own clients in a rapidly changing workplace. It also demonstrates our leading positions in healthy and growing markets.

“Based on our strong financial performance and our confidence in the trajectory of the business for the remainder of the year, we have again increased our full-year 2021 revenue guidance.”

The company says it now expects total revenue to grow 4.5% to 5% this year, compared to previous forecasts of growth between 4% and 4.5%. (See Insiders’ Hot Stocks on TipRanks)

On November 1, RBC Capital analyst Drew Mcreynolds downgraded TRI from Buy to Hold with a price target of $122 (C$150.99). This implies 2.3% upside potential.

Mcreynolds stated, “Following strong share price performance YTD, we are downgrading Thomson Reuters from Outperform to Sector Perform. We continue to view Thomson Reuters as a high-quality core holding with an ability to deliver annual total returns of approximately +10%. Following the rolling forward of our valuation and updated FX/LSEG assumptions, our price target increases from US$118 to US$122. The company will report Q3/21 results on Tuesday, November 2, 2021 and host a conference call at 8:30 a.m. ET.”

Overall, consensus on the Street is that TRI is a Hold based on two Buys and six Holds. The average Thomson Reuters price target of C$152.41 implies 3.3% upside potential to current levels.